Key Takeaways
- • Benefit Street Partners (BSP), Franklin Templeton's global alternative credit arm, expanded its asset-backed finance (ABF) platform through a deal with private credit firm Encina Lender Finance.
- • A new fund backed by Franklin Templeton and BSP-affiliated funds acquired an initial seed portfolio of around $480m (£364.3m) of commitments originated by Encina.
- • A 14-person investment team from Encina will join BSP and continue to manage and originate investments through the strategy.
- • BSP says the combined ABF platform can now originate more than $3bn a year, after completing more than $10bn of investments since inception.
- • The deal expands BSP's consumer and commercial lending capabilities as it builds a multi-strategy private ABF platform focused on the mid-market.
Summary
Benefit Street Partners (BSP), Franklin Templeton's global alternative credit arm, has expanded its asset-backed finance (ABF) platform through a transaction with private credit firm Encina Lender Finance. Under the deal, a new fund backed by Franklin Templeton and BSP-affiliated funds acquired an initial seed portfolio of around $480m (£364.3m) of commitments originated by Encina, according to Alternative Credit Investor. A 14-strong investment team from Encina will also join BSP, where it will continue to manage and originate investments through the strategy.
BSP said the transaction expands its capabilities in consumer and commercial lending as it looks to build out a multi-strategy private ABF platform focused on the mid-market. Having completed more than $10bn of investments since inception, BSP believes the combined ABF platform now has the capacity to originate more than $3bn a year. David Manlowe, chief executive of BSP, said "investor demand for ABF continues to grow among a mix of institutional allocators" and that adding the Encina team "broadens both our origination capabilities and the range of financing solutions we can provide."
The Encina team provides senior secured, unitranche and first-out financing to consumer and commercial asset originators across the US and Canada. Its investments are backed by diversified pools of underlying assets, including consumer loans, credit card receivables and small business loans.
Jenny Johnson, chief executive of Franklin Templeton, said the transaction "demonstrates the strength of our model" and noted that Franklin Templeton manages $1.8tn in assets, including more than $300bn in alternatives, of which around $97bn is managed by BSP.
Willkie Farr & Gallagher and Simpson Thacher & Bartlett acted as legal counsel to Franklin Templeton and BSP. Berkshire Global Advisors served as financial adviser to Encina Lender Finance, with Mayer Brown and Winston Taylor as its legal counsel.
BSP said the transaction expands its capabilities in consumer and commercial lending as it looks to build out a multi-strategy private ABF platform focused on the mid-market. Having completed more than $10bn of investments since inception, BSP believes the combined ABF platform now has the capacity to originate more than $3bn a year. David Manlowe, chief executive of BSP, said "investor demand for ABF continues to grow among a mix of institutional allocators" and that adding the Encina team "broadens both our origination capabilities and the range of financing solutions we can provide."
The Encina team provides senior secured, unitranche and first-out financing to consumer and commercial asset originators across the US and Canada. Its investments are backed by diversified pools of underlying assets, including consumer loans, credit card receivables and small business loans.
Jenny Johnson, chief executive of Franklin Templeton, said the transaction "demonstrates the strength of our model" and noted that Franklin Templeton manages $1.8tn in assets, including more than $300bn in alternatives, of which around $97bn is managed by BSP.
Willkie Farr & Gallagher and Simpson Thacher & Bartlett acted as legal counsel to Franklin Templeton and BSP. Berkshire Global Advisors served as financial adviser to Encina Lender Finance, with Mayer Brown and Winston Taylor as its legal counsel.
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