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European buyout group CVC has explored a deal for $75bn private credit lender Golub Capital, said several people familiar with the situation.
A potential deal for Golub underscores the shifts under way in the private investment industry, as traditional private equity firms look to expand into fast-growing corners of the finance industry focused on credit and infrastructure. It is unclear if discussions will lead to a deal, and one person close to the matter cautioned Golub was not entertaining a sale.
Golub, founded by Lawrence Golub in 1994, has become a force in private credit markets where it is a go-to lender to mid-sized and large corporations.
It was one of the early players in so-called direct lending, where it writes loans directly to businesses — bypassing traditional banks. The firm is one of the largest independent private credit lenders in the US.
The private investment sector is going through a period of consolidation as smaller firms buy rivals, especially credit specialists, to compete with groups such as Apollo Global Management, Blackstone and KKR. Credit funds have been popular in part because they are able to draw on ready pools of capital from insurance companies, which are seeking higher investment returns than they get from traditional fixed-income investments.
BlackRock’s agreement to buy HPS Investment Partners, TPG’s purchase of Angelo Gordon, and Brookfield’s acquisition of Oaktree, has shortened the list of privately held investors in credit with enough heft to attract acquirers.
The consolidation has also heightened industry attention on Golub and its larger rival Sixth Street.
CVC and Golub declined to comment.
Golub and competitors including HPS, Ares and Blue Owl were big beneficiaries of financial reform, introduced after the global financial crisis, that restricted the kinds of loans regulated banks could underwrite. The reforms unleashed private credit asset managers, sometimes referred to as shadow banks, and their lending has extended into new areas of the US economy.
Golub says it has originated more than $150bn in loans since 2004.
Amsterdam-listed CVC has been targeting a private credit firm in the US as it seeks a stronger American foothold after several underperforming private equity deals. The group manages €200bn in assets, including about €45bn in credit. The debt investing arm, established in 2006, primarily lends money to lower-rated companies in Europe and the US.
CVC held merger talks with HPS before the New York-based asset manager set its sights on a sale to BlackRock. CVC also held discussions to acquire a controlling stake in Mubadala-backed Fortress Investment Group, although those talks are no longer active, people briefed on the matter said.
In October Golub sold a minority stake in its business to Mizuho. Terms of the transaction were not disclosed, but the Japanese bank said it would own less than 5 per cent of Golub. As part of the deal, Mizuho agreed to sell Golub’s investment products to retail and wealthy individuals in Japan.
Additional reporting by Antoine Gara and James Fontanella-Khan
