51吃瓜网

Sumitomo Mitsui Banking is joining forces with asset managers at Monroe Capital and MA Financial Group to work together on $1.7 billion of lending deals in the fast-growing private credit market.

The tie-up between the Japanese banking conglomerate and its new partners will target U.S. middle-market companies, according to executives. They’ll be offering first-lien senior-secured loans starting this month, with the potential to increase the total based on demand.

“All three of us are very focused on making this a scalable, long-term partnership,” with “a shared credit and investing mindset,” Thomas Bergen, head of private credit at SMBC Americas, said in an interview.

Alliances among banks and private credit managers — long seen as rivals in providing financing — are reshaping Wall Street and capital markets as the two industries increasingly converge. Banks are looking to maintain their streams of fees without risking as much of their own capital and running afoul of regulatory limits. Private credit firms, which handle about $1.6 trillion in assets according to Preqin, are under pressure to find new sources of business by tapping into banks’ base of customers.

All three firms expect to provide the venture’s investable capital, with MA Financial’s contribution coming from its managed funds.

The recent rush into private credit by banks and asset managers has spurred concern that credit quality might be suffering, and that trade wars and a shrinking economy might make borrowers vulnerable. The new partners say they’ve taken precautions.

“Having a fresh capital base, unburdened by any legacy issues, is ideal going into this type of an environment,” SMBC’s Bergen said. “We’re able to digest and process some of the risks that are out there before making a lending decision.”

The group envisions teaming SMBC’s private credit and sponsor financing with Monroe’s direct lending capabilities and MA Financial’s specialties in credit and co-lending.

“Our expectation is this will be successful because we see the market opportunity” for lending to U.S. middle-market companies, those that generate $10 million to $50 million of Ebitda, said Zia Uddin, Monroe’s president. His Chicago-based firm specializes in private credit strategies including direct lending, venture debt, structured credit and alternative credit solutions.

Australia-based MA Financial manages more than $6.7 billion in assets and oversees about $91 billion in managed loans. The firm has a U.S.-based team focused on specialty credit and lending partnerships.

“In times like this, you want to be in defensive credit, such as first-lien senior secured positions to established businesses,” said Frank Danieli, head of MA Financial’s global credit solutions. “These are real-world companies that actually need financing.”