Tree Line closes $680M private-credit continuation vehicle

What's the deal? US direct lender Tree Line Capital PartnersDealroom has a profile for this one. Try Dealroom → has closed a $680 million private-credit continuation vehicle, with PGIMDealroom has a profile for this one. Try Dealroom → and LGT Capital Partners as co-lead investors. The vehicle gives existing investors across several Tree Line direct lending funds a liquidity option while letting the firm keep managing the underlying portfolio.

What's inside? The vehicle acquired a portfolio made up mainly of senior secured, first-lien loans to more than 60 US lower-middle-market companies. The borrowers span a range of industries and are backed by a diverse group of private equity sponsors.

Why now? The close caps a strong stretch for Tree Line, which raised $1.1 billion for its fourth direct lending fund in January — its largest raise to date. It also lands as PGIM expands into private-credit secondaries, with plans to deploy up to $1 billion over two years across the US and Europe.

What they're saying: "The transaction underscores our ability to work with blue-chip partners like PGIM and LGT Capital Partners and deliver attractive capital solutions to our investors," said Tom Quimby and Jon Schroeder, co-managing partners at Tree Line.

LGT Capital Partners has focused on credit secondaries since 2009. "Credit secondaries have become an increasingly important tool for managers and investors, and we see a deep and growing universe of opportunities," said Felix Janssen, partner and co-head of private credit solutions at LGT.

The signal: Continuation vehicles, long a staple of private equity, are gaining traction in private credit as a way to hand investors liquidity without forcing a sale. The deal's institutional backing and scale show that appetite now reaches mid- and small-cap loan portfolios — though with no pricing or returns disclosed, it reveals little about how the underlying loans are performing.

Read more: alternativecreditinvestor.com

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