The acquisition was made by PGIM, the financial services company’s $1.2tn investment management arm.
May 4 (Preqin News) - New York-listed insurance and investment group Prudential Financial has acquired a majority interest in private debt fund manager Deerpath Capital, a deal that highlights the continued expansion of traditional fund managers into alternative assets and the growth potential of the private debt market.
The acquisition was made by PGIM, the financial services company’s $1.2tn investment management arm. PGIM said Deerpath will retain investment and operational independence, with co-founders James Kirby and Tas Hasan continuing in their roles as CEO and COO, respectively. Deerpath had more than $5bn AUM as of March this year.
Investor interest in alternative assets has been bolstered by demand from institutions, high net worth individuals, family offices and others amid a push for diversification, particularly after both public equity and fixed income instruments suffered a rare simultaneous decline in 2022. Alternatives proved a bright spot in the performances of a number of public pension plans last year, while companies’ demand for private debt could increase this year following recent turbulence in the banking sector.
Founded in 2007, Deerpath is currently in the market raising its seventh fund, which has a target of $2.0bn and will focus on senior direct lending to US companies in the lower mid-market in sponsor-backed transactions. The predecessor fund launched in September 2021 and closed at its $1.5bn target in February 2023. Deerpath has invested more than $8.8bn in over 850 transactions since 2007.
PGIM Private Capital (formerly Pricoa Capital Group) invested $16.1bn of senior and junior debt in 2022, an increase from $14.5bn in 2021. PGIM said this was comprised of $12.9bn investment grade, $2.6bn below investment grade, and $584mn of mezzanine and private equity. It also raised its first direct lending fund, securing $2.4bn for PGIM Senior Loan Opportunities I.
PGIM has been building its reach and expertise in alternative assets, where it now manages an estimated $237bn across hedge funds, real estate, private equity, and private debt with a multi-manager model. In 2021, it acquired Montana Capital Partners, a €2.7bn AUM secondary fund-of-funds manager based in Switzerland.
Among other firms who have recently bolstered their alternatives capacity through acquisitions, Franklin Resources announced in November that it had completed the acquisition of European credit and private debt manager, Alcentra, from Bank of New York Mellon Corporation.
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