Wendel Group buys majority stake in private credit manager Monroe Capital

French investment firm Wendel Group on Oct. 22 agreed to take a $1 billion stake in Monroe Capital, a private credit money manager.

It’s the latest strategic partnership move in the booming private credit sector, an area that Monroe CEO Theodore L. Koenig said he believes will grow significantly from the current 5% to 6% allocation for institutional investors.

“I think within five years you’ll see an average 20% allocation,” he told Pensions & Investments.

As part of the deal, Wendel will commit $1 billion in seed capital and GP commitments to Monroe's current and future investment strategies. The transaction is expected to close in the first quarter of 2025.

Wendel is also taking a 75% equity stake in Monroe, according to a news release. Monroe’s management team will retain a 25% equity stake in the business and continue to operate independently.

Based in Chicago, Monroe was founded in 2004 and has approximately $19.5 billion in assets under management with over 270 employees across 11 offices around the world.

The strategic partnership will focus on funding growth and expanding Monroe’s private credit platform.

“A billion dollars of seed capital is going to allow us to leverage that seed capital to go and create many, many multiples of that in terms of our investor base throughout the world,” Koenig said. “And our core business, which is lower middle market finance, we want to continue to be the leading platform.”

Koenig pointed to growth in several areas including lower middle market private lending and alternative credit, which is Monroe’s asset-backed business, and real estate private credit.

Of the lower middle market, he said, “especially as interest rates come down, we expect to see a lot more activity because of pent up demand from private equity sellers.”

Koenig said over the last four years he has had many conversations on strategic partnerships.

“The Wendel deal made sense for us because they brought strategic capital to the table, but they also allowed Monroe to be independent and autonomous, which was key for our LPs,” he said.

Laurent Mignon, group CEO of Wendel said in the news release that the partnership, “will strengthen Wendel’s third-party asset management platform by enabling it to capitalize on the growing opportunity set in private credit and persistent growth in demand for direct lending solutions from investors and borrowers globally.”

Last year, Wendel moved into third-party asset management of private assets and in May it completed a 51% stake acquisition in IK Partners.

Monroe and Wendel also intend for AXA IM Prime to participate in the transaction.

AXA IM Prime and Wendel have a relationship and “both companies are now in discussion to confirm AXA IM Prime investment (up to $50 million) as a minority shareholder, through its GP-stake fund,” according to the release.

A recent Goldman Sachs Asset Management’s private markets survey found that 46% of institutional investors reported they were underallocated to private credit.