US-based investment manager Nuveen is buying Arcmont Asset Management, one of the largest private lenders in Europe, for over $1bn as traditional asset managers acquire fast-growing private capital firms in order to grow their presence in unlisted markets.
Nuveen, which is the investment manager for US teachers pension fund TIAA, is buying Arcmont to build its lending presence in Europe and expand its overall private credit business as rising interest rates make secured floating rate loans more attractive.
The acquisition comes amid a wave of dealmaking activity in the alternative asset management sector, particularly for private credit lenders that have increased their share of takeover financings this year as large banks pull back from making buyout loans.
Large asset managers like T Rowe Price, Franklin Templeton and BlackRock have acquired private debt managers in recent years as a response to the rise of passive investments, which have cut into their profitability. Last year, T Rowe acquired Oak Hill for $4.2bn, while BlackRock acquired Tennenbaum Capital in 2018.
There is also consolidation among alternative asset managers as private equity firms expand into credit-based investments. On Wednesday, General Atlantic acquired Iron Park Capital to create an internal credit investing arm.
Anthony Fobel, chief executive of Arcmont, said the firm’s sale to Nuveen, which manages $1.1tn in assets, will help the London-based firm quickly expand globally and increase the size of its lending commitments.
“Access to capital is the critical component,” said Fobel in an interview with the Financial Times. “At the moment we have more deals than we can handle. Access to TIAA’s balance sheet and Nuveen’s global capabilities will really propel our business.”
Jose Minaya, chief executive of Nuveen, said “Arcmont provides Nuveen with a transformational opportunity to significantly expand our position in one of the world’s most dynamic investment markets.”
Nuveen is paying over $1bn for Arcmont, according to people familiar with the matter. Arcmont and Nuveen declined to comment on the terms of the deal.
Arcmont, founded in 2011 as a lending business inside of hedge fund BlueBay, has grown into one of the largest direct lenders in Europe, focused on middle market loans for private equity takeovers of between $500mn to $1bn in size.
It has raised over $26bn from investors, becoming an increasingly active lender to private equity firms across Europe as large banks pull back their lending commitments. In 2019, it was spun out of BlueBay and received a minority equity investment from Dyal Capital Partners.
Nuveen plans to form a new unit called Nuveen Private Capital, which will house Arcmont and Churchill Asset Management, a New York-based lender it acquired in 2015.
The combined unit will manage over $60bn in assets and be led by Arcmont’s Fobel and Ken Kencel, chief executive of Churchill.
Both Arcmont and Churchill retain their brands, but benefit from increasing distribution, geographic reach and operational capabilities, said Minaya.