BlackRock says to buy private credit investor Tennenbaum Capital

BlackRock TCP Capital

18/04/2018 24:30

By Trevor Hunnicutt
    NEW YORK, April 17 (Reuters) - BlackRock Inc  BLK.N , the
world's largest asset manager, on Tuesday said it will buy
investment manager Tennenbaum Capital Partners LLC (TCP),
expanding its reach in the U.S. private credit market as
investors hunt for richer fixed-income returns.
    A deal for Santa Monica, California-based TCP, with some $9
billion in committed capital as of the end of 2017, makes
BlackRock into a bigger player in private debt markets. The
asset manager is better known for funds that invest in
traditional bonds and publicly traded companies.
    TCP is a specialized debt manager and its team of more than
80 people and partners will join BlackRock, according to a
BlackRock statement that did not specify terms of the proposed
deal. 
    The transaction is expected to close in the third quarter.
    BlackRock Chief Executive Larry Fink told Wall Street
analysts last week that he expects so-called illiquid
alternative investments, which include private credit and
typically come with higher fees than its other funds, to "be one
of the more significant" drivers for BlackRock's business over
the next few years.
    BlackRock reported $47.2 billion in illiquid alternative
assets under management at the end of 2017. The company manages
$6.3 trillion overall as of March 31.
    Deep-pocketed institutional investors turn to the private
debt market in hopes of getting richer returns than they can
find in public markets, where central banks slashed interest
rates in an effort to stabilize the global economy after the
2007-09 financial crisis.
    TCP also manages TCP Capital Corp  TCPC.O , a publicly
traded business development corporation. Those specialized
closed-end investment vehicles lend to small- and mid-sized
private U.S. companies, and their leverage is capped by law.
    Many invest in floating-rate debt that pays out more as
rates rise, making it attractive to investors who expect the
U.S. Federal Reserve to continue on its path of monetary policy
tightening.

 (Reporting by Trevor Hunnicutt; additional reporting by Leela
Parker Deo; editing by Jennifer Ablan and G Crosse)
 ((trevor.hunnicutt@tr.com; +1-646-223-7914))