Platinum Equity, a private equity firm with more than $13 billion in assets under management, will join the growing ranks of its peers that have crossed over into the private debt space.
To lead its new credit arm, the firm has brought on Michael Fabiano from GSO Capital Partners, the global credit investment arm of The Blackstone Group, where he spent nearly 13 years managing credit investments in challenged businesses.
Fabiano is slated to start his role in January 2019. In his position at GSO, Fabiano had co-invested with Platinum, which could not be reached for comment. Before joining GSO, he worked as an investment banker for Morgan Stanley’s leveraged finance team.
Platinum’s private equity platform raised $6.5 billion for its latest flagship buyout fund: Platinum Equity Capital Partners IV. The fund targets businesses in complex situations or in need of a turnaround in an array of industries. The firm also runs a small-cap strategy, which invests out of the $1.5 billion Platinum Equity Small Cap Fund.
With hopes of expanding their product set and adding to their AUM, many private equity firms are entering private debt. One recent entrant is BC Partners, which launched its debt arm in early 2017 and has passed the $1 billion AUM mark.
Two other firms that recently entered the asset class are Adams Street Partners and Riverside. The former debuted in 2016 with its Adams Street Private Credit Fund, which set a target of $750 million and raised $365.39 million. The latter raised its first non-control fund in 2017: the $418 million Riverside Strategic Capital Fund I, which invests in structured equity and has passed its $350 million fundraising target. Riverside has also raised $110 million of its $350 million goal for its debut credit-focused fund: Riverside Credit Solutions Fund I.
In addition to the growing competition in private credit, first-time managers may face barriers in winning commitments from limited partners, according to data from the PDI investor survey conducted earlier this year.
A majority – 57 percent – of the respondents said they do not currently commit to inaugural funds. Forty-nine percent said they do not commit money to debut managers, while 8 percent said they do not do so currently but plan to in the future.