This week we continue our conversation with Michael Ewald. Michael is a Managing Director, the head of the Private Credit Group and Portfolio Manager for Bain Capital Credit’s Middle Market Opportunities and Senior Direct Lending fund strategies. Bain Capital Credit, founded as Sankaty Advisors in 1998, is a leading global credit specialist with over $30 billion in assets under management and has more than 230 employees operating from a network of seven offices around the world. Second of two parts – View part one
TLL: Michael, I noticed that Bain Capital Credit recently closed the firm’s first BDC. Congratulations.
ME: This is our first BDC but it is surely not new asset class for my group. It’s not really different from our current strategy. We obtained exempt relief, which allows us to invest alongside our managed accounts and commingled funds. The Credit business started in 1998 and middle market lending was one of our original strategies, augmenting our CDO business. This strategy evolved steadily into more senior debt post-crisis, when pricing gapped out. We saw real opportunities sourcing the same type of deals as we were already completing with junior capital. Senior investing is a bit different work than mezzanine; the terms and docs can vary but it’s the same underlying business analysis. We raised a number of managed accounts to target senior direct lending and then smaller institutional funds asked us for a comingled fund; that led to Bain Capital Senior Direct Lending 2015. But we still had direct origination or leveraged income issues both for onshore tax-exempts and offshore funds. The BDC structure solves those concerns and we closed about $550 million in equity in October, and we expect that will grow. But there’s really no difference in our strategy.