Wells Fargo, Centerbridge Join Forces to Launch $5B Direct Lending Business

As banks seek to gain further traction in the $1.5 trillion private-debt market, Wells Fargo has partnered with private equity firm Centerbridge Partners to establish a $5 billion private credit fund that will lend to non-sponsor North American middle market companies.

Overland Advisors will be established by Centerbridge to oversee a newly formed business development company that will primarily issue senior secured loans. Overland will pursue typical sponsor-backed direct lending opportunities in addition to expanding financing availability to the non-sponsor market.

The $5 billion includes $2.5 billion in equity commitments for the strategy. Anchor investors, including wholly owned subsidiaries of the Abu Dhabi Investment Authority (ADIA) and British Columbia Investment Management Corporation (BCI), have committed to provide nearly $2 billion in equity commitments.

Wells Fargo, which is also a minority stakeholder in the company, can offer loans to existing customers as an alternative to other forms of funding.

“As a leader in U.S. middle market and asset-based lending, we are continually focused on finding ways to best serve our clients, and Overland can offer them options for alternative capital structures that can be used to pursue a broader set of growth and value creation initiatives across a variety of market conditions,” said Charlie Scharf, CEO of Wells Fargo.

The collaboration is in line with the strategies of major global financial institutions, including Societe Generale, Brookfield Asset Management Ltd., Deutsche Bank AG, JPMorgan Chase & Co., and Barclays Plc. Overland Advisors’ launch is intended to amplify this trend by expanding investment opportunities in the private debt market.

Centerbridge was co-founded in 2005 by Jeff Aronson and had approximately $36 billion in capital under management as of the end of June.