New York credit specialist PennantPark announced a joint venture with private market giant Pantheon to create the PennantPark Senior Loan Fund I.
Pantheon acquired a 28% stake or $35 million in PennantPark’s special purpose vehicle PennantPark Investment Corp. that currently holds $356 million of senior loans at fair value. The transaction positions PennantPark as a middle-market lender and to capitalize on compelling senior-loan opportunities amid historic market volatility, officials said in an announcement.
“Partnering with Pantheon, one of the world’s leading global alternative private market investors, will greatly enhance our value as a capital solutions provider and help us deliver long-term value to shareholders,” said PennantPark CEO Arthur Penn.
He added the PennantPark Senior Loan Fund will extend the $3.7 billion firm’s reach in middle market financing at a time when the team is seeing attractive risk-adjusted returns.
The aim of the joint venture though is to combine PennantPark’s middle market financing platform with Pantheon’s growing private credit business. After forming the new senior loan fund, the special purpose vehicle’s leverage will decrease by approximately $245 million, bolstering PennantPark Investment Corp’s balance sheet, officials said.
Pantheon can contribute an additional $30 million of capital in the fund over time. The $50.7 billion Pantheon has been investing in private credit since 1997.
“This transaction is illustrative of our growing private credit business across secondaries, co-investments and primaries,” said Rakesh Jain, partner and global head of private credit at Pantheon. “We seek to partner with established organizations such as PennantPark, to help drive value for both parties.”
He said that they chose to work with PennantPark because of its portfolio of assets, investment strategy and successful execution to date.