Originally from the Australian Financial Review
The new credit fund set up by senior investment bankers John Wylie and Michael Tierney is targeting a $250 million first close by the end of the year, opening up a potential new source of funding for private equity and sub investment grade borrowers.
Street Talk understands Tanarra Credit Partners chairman Wylie and the fund’s investment team including former Credit Suisse managing director Tierney and ex-Morgan Stanley banker Peter Szekeley have been pitching the fund to potential cornerstone backers in recent months.
According to a presentation seen by Street Talk, the pitch is about capitalising on the funding gap created by banks’ increased capital requirements and regulatory oversight which has seen them retreat from Australia’s leveraged finance and corporate loan markets.
The fund, Tanarra Credit Partners Asia-Pacific Fund I, would target 8-plus per cent net returns per year, by investing in senior secured, sub investment grade debt.
That means targeting private equity owned companies at a time when there is a growing institutional market in Australia for such loans.
Key to the pitch is Wylie’s record as an investor.
Potential investors were told that his personally-led investments by private equity funds had returned an average 32 per cent for investors, on an internal rate of return basis, while his venture capital deals had averaged 15 per cent.
Investments made while at Carnegie Wylie & Co returned an eye-watering 471 per cent. That means turning $2 million into $172 million. [Interestingly, it’s 10 years to the day since Carnegie and Wylie sold their advisory business to Lazard, and were said to be celebrating at Bondi Icebergs in Sydney on Tuesday night.]
Tierney also needs no introduction in regional private equity circles.
The dealmaker was formerly Asia Pacific head of leverage finance for Credit Suisse, where he originated more than $100 billion of loans in the past 20-years having initially been hired by Wylie, then head of Credit Suisse First Boston. Tierney left Credit Suisse last year.
Institutional investors are expected to compare it to similar Australian funds which have gained some momentum in recent years. The obvious one is Sydney-based Metrics Credit Partners, which is also in the market with a $500 million-odd raising for a new listed investment trust.
The fixed income manager was set up in 2011 and is run by Andrew Lockhart, Graham McNamara, Andrew Tremain and Justin Hynes. While the manager is backed by NAB, it is held at arm’s length and operates separately from the big Australian bank.