Private BDCs are Raising a Lot of Money

posted in: Blog, News | 0

6355345927_bab61b1682_bNo longer are private BDCs just a way for financial advisers to inflate their commission checks. New non-traded BDCs are getting institutional support from big names.

Owl Rock Capital (profile) is one such BDC. It has raised more than $1 billion of equity capital, with commitments of up to $2.1 billion more from large pension funds and other institutional investors. We estimate Owl Rock’s AUM could grow to $5.8 billion based on its current AUM and uncalled commitments.

Its pitch? It’s cheap. The manager currently charges just 0.75% on gross assets, making it less expensive than virtually any other public or private BDC that files with the SEC. Incentive fees are waived until it goes public. A listing is likely a long time away, given it has more in commitments than it has invested.

Are BDCs finally growing up? It sure looks that way. We liked a new post from Institutional Investor titled “Be Damned Careful,” a play on the BDC acronym. “When an investment vehicle’s fee practices make private equity look good, it may have a problem.” We agree.

Private credit is red hot as fees make it possible for institutions to get involved. We like this trend.

Leave a Reply