United States direct lender Tree Line Capital Partners has closed a $680 million private credit continuation vehicle, with PGIM and LGT Capital Partners acting as co-lead investors. The vehicle provides existing investors across several Tree Line direct lending funds with a liquidity option while the firm continues to manage the underlying portfolio; AltAssets reported the liquidity covers investors in two of the manager’s funds.
The vehicle acquired a portfolio made up primarily of senior secured, first lien loans to more than 60 United States lower middle market companies across a broad range of industries, backed by a diverse group of private equity sponsors. “The transaction underscores our ability to work with blue-chip partners like PGIM and LGT Capital Partners and deliver attractive capital solutions to our investors,” said Tom Quimby and Jon Schroeder, Tree Line’s co-managing partners.
For PGIM, the deal is an early deployment of a new strategy: at the beginning of this year it announced an expansion into private credit secondaries with plans to deploy up to $1 billion over two years, focused on GP-led and LP-led opportunities in the United States and Europe. “As the private credit secondaries market grows and evolves, we are seeing continuation vehicle solutions gain traction across a broader range of portfolio sizes, including mid- and small-cap investments,” said Alex Stuart, PGIM’s head of private credit secondaries. LGT Capital Partners has worked in credit secondaries since 2009.
The close follows Tree Line’s $1.1 billion fourth direct lending fund raised in January, its largest to date, and arrives the same week KKR closed its first private credit continuation vehicle at more than $460 million.