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May 07, 2024

Wellington, the quiet giant, wades into private credit amid boom in lending

Wellington Management is the quiet giant of investing, amassing $1.2 trillion in assets mainly in long-only public markets and long/short hedge funds. Now the Boston-based money manager is moving earnestly into the booming world of private credit.

The firm in 2023 launched an investment-grade private placement vehicle for institutional investors, aimed at insurance companies and other separately managed accounts. Over time, Wellington aspires to build a platform that could represent more than $30 billion in assets in the next 10 years, according to executives at the firm.

Wellington Management's Emily Bannister and Scott Geary

Wellington began to build out the private credit business with a “building blocks approach,” starting with a 2023 investment-grade private placement strategy for insurers, according to Emily Bannister, director of Wellington’s private credit business.

 

Wellington is expanding in the alternatives space, but “we’re not just doing private credit in the middle market. That’s where everyone started,” said Bannister.

“We think there are interesting areas right now where Wellington might have an edge,” including the investment-grade portion of private credit, she said. As of Dec. 31, Wellington managed $307 billion in public credit strategies, and “we’ve seen a real convergence between public and private markets. Having a lens on both sides helps us understand funding models.”

Creditors — that is, potential company borrowers — “view Wellington as a strategic partner with great access to supply chains and networks at private companies,” Scott Geary, vice chair, partner and head of client group, added.

 

Wellington’s private investing business expanded last year with the hiring from Barings of Emeka Onukwugha, head of private placements, and Elisabeth Perenick, head of portfolio management in private placements. They worked together for the past 20 years. That team will lead Wellington’s private placement debt business.

In addition, the firm hired Jeff Chapman as head of its new growth lending to include lending to growth-stage private companies and founders across the healthcare, life sciences and technology sectors. Chapman was hired this year and spent the majority of his career on credit origination, structuring, and underwriting and joined from CIBC Innovation Banking, where he led life sciences and healthcare lending.

“This is a big growth area as a firm. We see more clients allocate to it. We want to be their key strategic partner. So having this capability as they allocate more is a key part of our strategy,” Bannister said.

“We’re not first to the space. We’re not trying to replicate what’s in the market, but I hope what we provide is something unique,” Geary added.

 

Private partnership

Wellington is a private partnership and executives have historically avoided interviews. But as the global firm expands, it’s lifting the veil on its inner workings and investment process. The firm holds an early morning meeting attended by a majority of the investment professionals across the world, where everyone from analysts to portfolio managers can contribute.

Wellington has invested in alternatives for 30 years, overseeing over $35 billion in assets across private investments and hedge funds, with nearly 100 dedicated investment staff.

 

“We went into alternatives hedge funds in 1994 as a tool for talent retention,” said Geary.

“Then we went on to build other hedge funds over time, and we’ve grown that to $27 billion,” Geary said. Geary is a member of the firm’s boards in Shanghai and Tokyo. Prior to his relocation to Boston in mid-2023, he was based in Hong Kong as head of the Asia-Pacific client group and before that was in the San Francisco office as director of the western region within the Americas institutional group.

But in 2023, the firm launched the investment-grade private placement strategy, led by Onukwugha and Perenick, as part of a multiyear expansion into private credit. It was a follow-on to its other private investment funds.

 

Wellington is one of the world’s largest buyers of IPO issues, given its massive long-only money management business as subadviser for Vanguard Group mutual funds and for other firms.

“We saw that companies were staying private for longer, so we did our first fund investing in private investments in 2014,” Geary said. That first fund was led by Michael Carmen, now a partner at Wellington and co-head of the private investments division.

“Then we thought, what are the other adjacencies? So as the world’s largest healthcare investor, we started a private biotech fund, and just launched our second one, as well as a private climate innovation fund,” Geary said.

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