News & Analysis

Neuberger closes Bain credit fund restructurings

A few dozen positions held in the 2005- and 2007-vintage Sankaty Credit Opportunities Funds II and III were moved into a separate vehicle in a deal that closed in early June.

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Neuberger Berman has closed a GP-led restructuring process involving two pre-crisis credit funds managed by Bain Capital.

The New York-headquartered firm’s secondaries unit backed a deal in which several dozen active positions in Sankaty Credit Opportunities Funds II and III were moved into a separate vehicle, according to two sources familiar with the matter.

The process was worth between $100 million and $500 million, according to one of the sources.

It is understood that the deal, which launched at the end of last year, closed in the last week and that Houlihan Lokey and Kirkland & Ellis were the respective financial and legal advisors.

It is unclear how many LPs chose to sell their stakes to Neuberger. Bain ran the process because it wanted to offer liquidity to LPs in the vehicles, one of the sources said.

Sister publication Buyouts reported in April that Neuberger Berman was set to back the deal.

Stakes in mezzanine and other credit funds – excluding distressed and special situations – accounted for 1 percent of the $73 billion in total deal volume, according to Campbell Lutyens’ 2019 Secondary Market Overview.

Fund II is a 2005-vintage that closed on $1.35 billion while Fund III is a 2007-vintage that raised $2.2 billion, according to PEI data. Around 85 percent of the positions by value are equity stakes, according to one of the sources.

Limited partners that backed Fund III include the California Public Employees’ Retirement System, Pennsylvania Public School Employees’ Retirement System and the University of Illinois Foundation, according to PEI data. Investors in Fund II include Dartmouth College, Los Angeles Fire & Police Pension System and Massachusetts Institute of Technology Retirement Plan.

Boston-headquartered Bain re-named its credit group from Sankaty Advisors to Bain Capital Credit as part of a broader rebranding in 2016.

Bain and Houlihan Lokey declined to comment. Neuberger Berman and Kirkland & Ellis did not return requests for comment by press time.