Jefferies Dives Deeper into Direct Lending with New BDC Launch

Jefferies Credit Partners, a private credit manager and asset management arm of Jefferies Finance LLC, intends to launch a private placement of a business development company (BDC) to enhance its lending capacity in the private credit space.

The new venture is set to be anchored by a $625 million equity investment from the $708 billion Abu Dhabi Investment Authority, providing the BDC with an initial $1.7 billion of investable capital.

The BDC will focus on first lien senior secured loans to private equity sponsored US companies, targeting upper middle-market borrowers that have more than $75 million of EBITDA.

This move comes as the private credit industry, now worth $1.5 trillion, sees companies seeking alternatives to volatile broadly syndicated financial markets and investors seeking higher yields.

“This agreement with ADIA to seed our first BDC comes as the tailwinds in the private credit market have never been stronger,” Thomas Brady, president of Jefferies Finance, said.

Jefferies’ decision to launch a non-traded BDC is part of a larger industry trend, with firms such as Golub Capital, HPS Investment Partners, Blue Owl Capital, Apollo Global Management and Fidelity initiating similar structures.

Jefferies Finance is a joint venture of Jefferies Financial Group and Massachusetts Mutual Life Insurance Company.