Blackstone is supporting the Brigade with a $300 million investment in private credit and CLOs

Hedge fund Brigade Capital receives funding from Blackstone BX $300 million investment to build its new retail lending strategy and expand its collateralized loan obligation (CLO) platform, according to two people familiar with the matter.

Brigade, an established credit investment specialist, launched a joint bid for Macy’s department store earlier this year m headlines, expanding their expertise in the hot personal loan market, where non-banks lend to businesses worth about $2 trillion.

Blackstone’s multi-asset investment unit commits $150 million to Brigade’s new strategy. Brigade has raised about $500 million for the strategy this year and plans to focus on opportunities in the lower middle market, where companies generate between $10 million and $50 million in earnings before interest, taxes, depreciation and amortization, one of the known people. said.

Representatives for Blackstone and Brigade declined to comment.

The allocation comes from the unit’s Strategic Alliance Fund IV, which is led by David Ben-Ur and has more than $1 billion in assets. Brigade is the third fund manager to join Fund IV. Blackstone had previously added London-based Astaris Capital Management to the fund.

The Brigade is an established manager with approximately $28 billion in assets and is expanding in the private credit market.

In total, Brigade has raised about $1.5 billion to build its private lending platform, including commitments for future funding, one of the people said.

The lower middle market offers a wealth of loan opportunities with higher spreads and yields because there is less competition. Some examples of lower middle market lenders include vacation rental company Awayday and mattress and bedding retailer Saatva.

Brigade’s personal lending efforts began in earnest when it poached Jenny Lee from JPMorgan Chase and Jim Wolf from Whitehorse Capital two years ago to lead the strategy. Their strong networks and years of experience are expected to help them find smaller deals that are often harder to find, one of the insiders said.

Blackstone is also providing $150 million to support Brigade’s CLO business with special equity commitments for new CLOs globally. The capital comes from the total return platform of the multi-asset investment unit, which is also managed by Ben-Ur. Brigade’s CLO business currently has approximately $11 billion in assets spread across 25 transactions in the US and Europe.

CLOs provide diversification to the broader syndicated loan market, and CLO equity is structured to benefit from loan market volatility as non-market leverage and term financing are traded.