(Oct 22): French investment firm Wendel has agreed to acquire a majority stake in private lender Monroe Capital for US$1.13 billion (RM4.86 billion) to extend its reach to the booming private credit category.

Wendel will buy a 75% stake in Monroe Capital and provide an additional US$1 billion to grow Chicago-based firm’s business and seed new funds, according to a statement on Tuesday, confirming an earlier Bloomberg News report. The transaction also includes an earn-out mechanism of as much as US$255 million. The deal is expected to close in the first half of next year.

Founded in 2004 by Theodore Koenig, Monroe provides private credit to borrowers in the US and Canada and manages about US$19.5 billion. The company has 11 offices including one in Abu Dhabi and one in Seoul.

“This is a very significant and transforming deal for Wendel,” Laurent Mignon, chief executive officer of Wendel, said in a press conference. “It will increase our exposure to the US, which is a good thing because the US economy is more dynamic than Europe’s over the long term.”

The deal for Monroe dovetails with Wendel’s new strategic direction announced last year. The firm has been building out a new asset management business overseeing third-party money. Family-backed Wendel has previously invested from its own balance sheet. It sold holdings in publicly-listed firms and redeployed the proceeds into private markets. It bought a majority stake in mid-market buyout firm IK Partners earlier this year.

Monroe will be a great base for Wendel to launch its private credit operation in Europe, which is much less developed than in the US, Mignon said. In the short term, Wendel will focus on Monroe’s integration, but it will keep looking for opportunities in the infrastructure area and in secondary market for private equity in Europe and the US, he said.

Shares of Wendel rose as much as 1.7% in early Tuesday trading in Paris, giving the company a market value of about €4.2 billion (RM10.58 billion).

Wendel will acquire 50% in Monroe from its management and another 25% from Bonaccord Capital Partners. AXA IM Prime, a unit of AXA Investment Managers, could invest alongside Wendel as a minority shareholder. The Paris-based firm will have a path to purchase the remaining shares in subsequent transactions that would take place in three instalments over 2028 and 2032.

UBS Group AG and financial-services specialist Fenchurch Advisory advised Wendel, while Monroe was advised by Goldman Sachs Group Inc.

The lucrative and growing world of private credit has attracted firms including Apollo Global Management Inc, Blackstone Inc, Ares Management Corp and Blue Owl Capital Inc. It’s also spurred acquisitions and partnerships by firms seeking to expand their reach.

Last year, TPG Inc bought credit firm Angelo Gordon for US$2.7 billion. BlackRock Inc agreed this year to buy Adebayo Ogunlesi’s Global Infrastructure Partners for about US$12.5 billion in a transformational deal for the industry.

Blue Owl has struck multiple deals this year, including agreeing to buy credit manager Atalaya Capital Management. BlackRock is among the firms exploring a purchase of HPS Investment Partners, Bloomberg News reported this month. 

Apollo has teamed up with Citigroup Inc on US$25 billion worth of private credit deals over the next five years. Lazard Inc has also considered several opportunities to acquire a private-credit firm.

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