The $1.2 trillion investment management business of Prudential Financial, PGIM, signed a deal to acquire a majority interest in credit specialist Deerpath Capital.
Deerpath is known for its U.S. private credit and direct lending offering that is focused primarily on private equity sponsor-backed companies in the lower middle market. The $5 billion firm is set to retain its operational and investment independence as part of PGIM Private Capital and will receive support from PGIM.
“This partnership with Deerpath Capital reflects our ambition to further grow our alternatives platform,” said David Hunt, president and CEO of PGIM. “It complements PGIM Private Capital’s existing direct lending capabilities by adding expertise in the lower middle market-sponsored space, further enhancing the direct origination platform of PGIM Private Capital’s core middle market-focused direct lending platform.”
The timing of the close of the transaction is subject to the receipt of all regulatory approvals, officials said.
The partnership with Deerpath Capital enhances PGIM’s existing global alternatives offering, which is currently $237 billion in AUM in strategies across real estate, private credit and other alternatives. The combination, according to President and CEO of PGIM Private Capital Matt Douglass, will accelerate the growth of both PGIM Private Capital and Deerpath’s platforms going forward.
Deerpath Co-Founders James Kirby and Tas Hasan will continue to manage the business as chief executive officer and chief operating officer. The Deerpath team will work closely with PGIM Private Capital’s Head of Alternatives Jeff Dickson, who oversees direct lending alongside PGIM Private Capital’s corporate mezzanine, energy mezzanine and sustainable power investment platforms. Dickson will collaborate with Deerpath’s Kirby and Hasan to maximize the potential between the two companies’ complementary deal sourcing capabilities.
“PGIM Private Capital has been a global leader in debt investing for more than 50 years and is an ideal strategic partner for Deerpath. Their deep understanding of the asset management business, global footprint and distribution network will help Deerpath grow our direct lending platform, while allowing us to preserve our investment and operational independence,” said Kirby, co-founder, president and CEO of Deerpath Capital Management.
Deerpath closed its fifth fund in 2021 with $1.1 billion in committed capital. Most recently, officials raised $504 million in CLO issued earlier this year. Deerpath has provided customized cash flow based on senior debt financing to lower middle-market companies across a wide range of industries, filling the space left by reluctant bankers, since its inception in 2007.
Since inception Deerpath has deployed over $8.8 billion of invested capital in more than 850 investments. With over 80 employees, the firm’s origination offices span New York, Boston, Chicago, Fort Lauderdale and Los Angeles. Additionally, Deerpath operates offices in London, Seoul and Australia to support investors.
Sera Global served as exclusive financial advisor to Deerpath Capital, and Purrington Moody Weil LLP served as Deerpath’s legal counsel. BofA Securities served as exclusive financial advisor to Prudential, and Debevoise & Plimpton LLP served as legal counsel.