PGIM will acquire a majority interest in U.S. private credit and direct lending manager Deerpath Capital Management, in a deal that PGIM said will strengthen its $237 billion global alternatives capabilities.
Deerpath Capital focuses primarily on financing private equity sponsor-backed companies in the lower-middle market and has more than $5 billion in assets under management. The firm has deployed over $8.8 billion of invested capital in more than 850 investments across a range of industries and transaction types. The firm has origination offices in Boston, Chicago, Fort Lauderdale, Los Angeles and New York, as well as offices in London, Seoul and Australia to support international investors.
The firm will retain its investment and operational independence, becoming part of PGIM Private Capital — the $1.2 trillion manager's unit that manages private fixed-income and alternative portfolios, according to a Tuesday news release. PGIM Private Capital has $96 billion in assets under management.
Deerpath co-founders James Kirby and Tas Hasan will continue in their roles as CEO and chief operating officer, respectively. The Deerpath team will work closely with Jeff Dickson, head of alternatives for PGIM Private Capital, the news release said.
In an interview at the Milken Institute Global Conference on Tuesday, PGIM CEO David Hunt said the firm's strategy behind the acquisition was "to drive alternatives. Now we will cover the lower-middle-market lending sector, which gives us expansion of our private credit capabilities."
Mr. Hunt said PGIM has known Deerpath Capital "for many years. It's not a huge world in private credit, and we've come to respect their culture and way they do business. They follow the same model we do," which is direct origination of loans to businesses.
"We call on management teams, develop relationships with them and lend them money. We have a partnership with them. Deerpath does same thing," he said. "There's real business operating model alignment. We can really help each other. It will turn out to be good for our clients," Mr. Hunt said.
A spokesman for PGIM declined to provide further details about the deal.