This partnership will be facilitated through the launch of Overland Advisors, a business development company focused on making senior secured loans, the companies said in a Tuesday (Sept. 26) press release.
Overland Advisors represents a new business model for direct lending to middle-market companies, diversifying the market of clients served by private credit and direct lending, according to the press release.
The partnership between Centerbridge and Wells Fargo will involve differentiated origination sourcing from Wells Fargo’s extensive middle-market customer base, as well as an equity investment from Wells Fargo, the release said.
The goal of Overland Advisors is to offer alternative capital structures that can support the growth and value creation initiatives of Wells Fargo clients and other non-sponsor owned middle-market businesses, per the release. By providing financing access to the non-sponsor segment, Overland Advisors aims to broaden the types of businesses served and pursue traditional sponsor-backed direct lending opportunities.
To support its operations, Overland Advisors has secured anchor investors, including wholly owned subsidiaries of the Abu Dhabi Investment Authority (ADIA) and British Columbia Investment Management Corporation (BCI), which have committed a total of nearly $2 billion in initial equity commitments, according to the press release. The company is targeting a minimum of $5 billion in investible capital, with $2.5 billion in equity commitments.
Jeff Aronson, co-founder and managing principal of Centerbridge Partners, said in the release that Overland represents a new paradigm in direct lending, offering a relationship-driven approach and a much-needed capital solution in the under-penetrated non-sponsor U.S. middle market. He sees the partnership with Wells Fargo as an attractive proposition for borrowers in the private lending and direct credit space.
Charlie Scharf, CEO of Wells Fargo, emphasized the bank’s commitment to finding ways to best serve its clients. He sees Overland as an opportunity to offer clients options for alternative capital structures that can support their growth and value creation initiatives.
PYMNTS reported in June that banks’ pullback from certain sorts of lending has created an opportunity for direct lenders, who see an opportunity for a steady income stream, growing returns and transaction fees.
This trend follows the collapse of Silicon Valley Bank and the UBS takeover of Credit Suisse that added pressure to bank lending, which had already felt a long-lasting impact from the 2008 financial crisis.