Lazard and alternative credit firm Arini Capital Management announced an alliance focused on sourcing and cooperation for direct lending across Europe, the Middle East and Africa.
As part of the agreement, Arini will have access to Lazard’s origination activities for mid-cap borrowers across the regions, and Lazard’s clients will have access to another potential financing source, according to a March 25 news release.
Additionally, Lazard’s asset management arm will introduce clients to Arini’s offerings including a European direct lending strategy which is launching on the back of the partnership. As part of the alliance, Arini will maintain autonomy over its investment process and supplement Lazard’s nonexclusive sourcing with its own propriety deal origination.
“The growth of private capital is deeply relevant to our European clients,” said Jean-Louis Girodolle, Lazard’s co-head of European investment banking, in the release. “This commercial agreement embodies Lazard’s commitment to provide clients with innovative products and solutions in this area.”
The $169.4 billion British Columbia Investment Management Corp., Victoria, intends to be an anchor investor for Arini’s European direct lending strategy, a spokesperson confirmed to Pensions & Investments.
The direct lending strategy will have a focus on the nonsponsor European middle market, said Arini’s president Mathew Cestar in an interview with P&I.
“We think this middle market opportunity, particularly in Europe, is an interesting one … the public syndicated markets used to really service this type of borrower, and now with the change in rates and change in the investor base, they’re really focused on much, much larger companies,” Cestar said.
As direct lending firms have grown in size, they are increasingly focused on the upper middle market, leaving middle market companies with “acute needs because what they're given now is more of a kind of a plain, vanilla commercial bank option,” Cestar added.
Arini launched in 2021 spinning out of Credit Suisse and is helmed by CIO Hamza Lemssouguer. The London-headquartered firm had approximately $7.9 billion in assets under management as of Feb. 28 and invests in areas including long/short credit, structured credit, opportunistic credit and direct lending.
Asset managers, banks and private credit firms have announced a flurry of strategic partnerships and tie-ups. For example, Apollo Global Management has disclosed bank partnerships with Citigroup, BNP Paribas and Standard Chartered.
And more recently, DWS Group and Deutsche Bank announced that they are teaming up on private credit, giving the asset manager preferred access to certain deals originated by the bank.
While many partnerships in the U.S. have focused on balance sheet banks, Cestar said, “We evaluated it here, and we thought that going with an independent would be a more strategic way to do it.”
Arini has grown its team in Europe and U.S. over the past year and now has over 10 people dedicated to private credit as a product team as well as the firm’s credit sector analysts, Cestar said. And increasingly there is a convergence between private and public credit markets, he added.
“We are really led by where the opportunities sit. And so this extension into private markets is because we see there's real opportunity,” he said.
