Guggenheim Partners LLC raised about $1 billion for a new fund that will make loans to public and private companies with revenues of as much as $500 million, according to a regulatory filing.
The Guggenheim Private Debt Fund filed a Form D today with the U.S. Securities and Exchange Commission disclosing it received $952 million in commitments from 11 investors. The actual amount gathered was slightly more than $1 billion, Zach Warren, a senior managing director at Guggenheim, said in an interview. The investors were primarily insurance companies.
The fund will make both senior and subordinated loans to middle-market companies, defined by Guggenheim as those with revenue of $50 million to $500 million and earnings before interest, taxes, depreciation and amortization of $10 million to $50 million. The fund has already made a number of loans, according to Warren.
Guggenheim, with headquarters in Chicago and New York, has issued almost $4 billion in loans to middle-market companies through various private funds, according to Warren. Asset managers have stepped in to fill a funding gap that arose after banks scaled back their lending to middle-market companies amid the 2008 financial crisis.
Guggenheim, a closely held company whose initial investors included members of the Guggenheim family, has six primary businesses including money management and insurance. The loan vehicle’s structure is similar to that of a private-equity fund, including an initial four-year period in which to make loans and a five-year life thereafter, Warren said.
Money managers such as New Mountain Capital LLC and Fidus Capital LLC sold stock last year in seven publicly traded vehicles designed to provide financing to middle-market companies, with one additional fund going public this year, according to Troy Ward, a specialty finance analyst at Stifel, Nicolaus & Co. in St. Louis. The public funds are often structured as business development companies.