Principal® expands direct lending business in 2021 with eight-fold increase in committed capital
Principal Global Investors®, through its direct lending business, Principal Alternative Credit, closed out 2021 with a more than eight-fold increase in committed capital, advancing its plans to expand its private debt capabilities. Marking the completion of its first full year in the direct lending market, Principal Alternative Credit closed on nearly 40 transactions, including five transactions as the lead agent, representing over $750 million of committed capital.
Principal Alternative Credit invests in privately negotiated debt transactions with both sponsor-backed and non-sponsored middle market companies throughout North America that typically have $5 million or more in EBITDA. The direct lending team targets transactions of $25 million to $200 million, with a typical hold size of $10 million to $50 million.
Transactions in 2021 included opportunities across the full range of products Principal Alternative Credit offers, including senior, unitranche, mezzanine and holdco PIK debt, along with equity tag investments backing both sponsor and non-sponsor, leveraged buy-outs, add-on acquisition financings, debt refinancings and recapitalizations.
“Our partnerships with an expanding group of private equity sponsors over the past year and a half demonstrate the array of solutions we can provide our clients as they grow their businesses,” said Tim Warrick, managing director, Principal Alternative Credit. “We look forward to 2022, and the opportunity to expand on this capability, as we anticipate issuing commitments of $1.5B, adding strategic hires in both our sponsor and non-sponsor coverage areas and expanding our fundraising efforts.”
Principal Global Investors has been expanding its direct lending relationships and capabilities since July 2020, accelerating asset deployment. Utilizing the firm’s 50-year heritage of private credit lending1, Principal Alternative Credit seeks to provide clients with financing options tailored to their capital needs.
“This past year has been a great example of our team’s ability to maintain a flexible and nimble approach, balanced by appropriate credit appetite. We experienced a significant increase in opportunities in the fourth quarter and were able to win transactions and solve financing challenges for both new and existing relationships,” said Matt Darrah, managing director and head of underwriting, Principal Alternative Credit.
1Experience includes investment management activities of predecessor firms beginning with the investment department of Principal Life Insurance Company.
About Principal Global Investors®
Principal Global Investors® leads global asset management at Principal®. As a multi-investment team firm, we bring a focused perspective and offer expertise across a host of asset classes.
At our core, we are driven by our purpose to help investors and businesses achieve their financial goals. Our global investment professionals deliver investment solutions for public and private pension funds, foundations and endowments, central banks, insurance companies, sub-advisory arrangements, sovereign wealth funds and individual portfolios.
Principal Global Investors manages approximately $577.4 billion in assets on behalf of over 800 institutional clients located in over 80 markets as well as retirement plans and individual clients, reflecting our worldwide market reach and experience and our commitment to high-quality research and service (as of September 30, 2021). To find out more, visit us at principalglobal.com.
The recent transactions profiled above are intended to demonstrate the application of Principal Alternative Credit investment strategy and represents middle marketing lending transactions previously entered by Principal Alternative Credit. There is no guarantee that any future transactions entered will have the characteristics like the deals profiled above.
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