Fifth Third Launches Private Credit Pact With Asset Manager Eldridge

Fifth Third Bank is set to offer its commercial bank clients private credit arrangements.

The new program, announced Tuesday (July 29), is happening in collaboration with asset manager Eldridge and designed to provide “reliable” private credit solutions to clients.

“This marks a significant moment in providing a private credit solution for our clients,” said Kevin Khanna, head of Commercial Banking.

“By uniting complementary strengths and deepening our relationship, we are positioned to unlock new opportunities and enhance our collective value proposition. Most importantly both Fifth Third and Eldridge can deliver flexible, forward-looking financing solutions that empower clients to pursue strategic opportunities with confidence.”

Nicholas Sandler, co-president of Eldridge Capital Management, added that his company’s relationship with Fifth Third began with the bank supporting an Eldridge’s affiliate asset-based credit growth through building a large ticket equipment finance origination platform.

“This new partnership in private credit reflects a natural evolution of our engagement, grounded in a shared dedication to excellence,” Sandler said.

The partnership comes as the fortunes of banks and private credit operations are “increasingly intertwined,” as PYMNTS wrote in May.

Research by the Federal Reserve Bank of Boston shows that banks have been increasing their exposure to nonbank financial institutions (NBFI), a category that covers private equity (PE) and private credit (PC). Loan commitments from banks to PE/PC funds came to approximately $300 billion, or 14% of large banks’ total lending to NBFIs, as of the end of 2023. The figure was less than $10 billion a decade earlier.

The Boston Fed argues that “understanding the scale and complexity of bank-NBFI connections is important for identifying potential risks to financial stability — that is, the financial system’s ability to continue supplying capital to the economy if strained by shocks.” PE and PC firms, in turn, put their money to work in the economy.

However, when these firms are hit by shocks, “they tend to draw down their bank lines of credit at a faster rate than firms with only bank credit,” the Fed report added.

“This creates a channel through which PC funds may increase banks’ credit and liquidity risks, on balance.”

Recent reporting by PYMNTS has explored the opportunities and growth industries funded by private credit. Artificial intelligence has been a particular area of rising investment, representing a $1.8 trillion market for funding to help develop data centers and other infrastructure