Wells Fargo and Centerbridge Launch $5 Billion Private-Credit Fund



(Bloomberg) — Wells Fargo & Co. and Centerbridge Partners are joining forces on a direct-lending fund, the latest in a flurry of bank efforts to gain share in the $1.5 trillion private-debt market.

The fund will target at least $5 billion, including $2.5 billion in equity commitments, and will primarily make senior secured loans to non-sponsor-backed middle-market firms in North America, according to a statement Tuesday. Centerbridge created a subsidiary called Overland Advisors to manage the business development company, which is an investment vehicle popular in private credit. Wells Fargo, the fourth-largest US bank, will provide client sourcing and a minority investment.

The Abu Dhabi Investment Authority and British Columbia Investment Management Corp. are among anchor investors that have provided nearly $2 billion in initial equity commitments, according to the statement.

Wells Fargo joins a growing list of banks muscling into the private-credit space in recent weeks. Earlier this month, Societe Generale SA announced a partnership with Brookfield Asset Management Ltd., and Deutsche Bank AG launched a dedicated private-debt fund. Meanwhile, JPMorgan Chase & Co. and Barclays Plc have both earmarked cash from their own balance sheets to compete on deals.

“With Overland, there’s another option to finance that transaction that allows that client to keep their existing relationship with their banker in a way that doesn’t have the same friction or switching costs that they would if they went to another direct lender,” David Marks, executive vice president of Wells Fargo commercial banking, said in an interview.

Private credit has erupted in popularity in recent years, first as investors sought higher-yielding assets in a low-rate environment and then amid rising interest rates globally, as many private loans are floating-rate. That’s threatening a key revenue source for traditional lenders, who have historically arranged and then sold the debt.

The move marks a new strategy under Wells Fargo Chief Executive Officer Charlie Scharf, who has been remaking the firm since taking the helm four years ago. The San Francisco-based company, which has a sprawling commercial bank, had $229 billion in commercial banking loans on its balance sheet as of June 30.

“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,” Scharf said in the statement.

New York-based Centerbridge invests across private equity, private credit and real estate, and had about $36 billion in capital under management at midyear.

“What Overland is doing is taking direct lending from a transactional, Wall Street approach and bringing it to a relationship, Main Street approach,” Centerbridge co-founder Jeff Aronson said in an interview.

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Edmund Shing, PhD

Global Chief Investment Officer
BNP Paribas Wealth Management

Edmund has over 29 years of experience in financial markets in a wide variety of positions, ranging from proprietary trading to portfolio manager in a number of financial institutions in London and Paris.  He previously held the role of Global Head of Equity and Derivative Strategy at BNP Paribas in London from 2015 to 2020, and has been Chief Investment Officer at BNP Paribas Wealth Management since November 2020.

Edmund is responsible for piloting our investment strategy and will continues to rollout out recommendations and themes with actionable advice that brings our expertise to our clients and support to our client-facing teams.  In this time of change, his expertise in following and anticipating markets is a true value added for both our customers and those at Wealth Management who serve them.

Edmund has a PhD in Cognitive and Computing Science from the University of Birmingham in the United Kingdom, and has done advanced studies in Knowledge-Based Systems and in Experimental Psychology.  He is an EFFAS-certified financial analyst. He has also authored the book “The Idle Investor” published by Harriman House in 2015, proposing 3 simple investment strategies that take only a few minutes to execute per month.

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