GoldenTree Asset Management has closed its second private credit fund at its $2.75 billion hard cap. The oversubscribed fund attracted commitments from institutional and private wealth investors across the United States, Europe, Asia and the Middle East.
Investors include public and corporate pension plans, sovereign wealth funds, foundations, insurance companies, family offices and registered investment advisers. GoldenTree’s partners and employees committed $50 million to the fund, aligning the firm’s capital with its investors.
More than $800 million of the commitments were made through a rated feeder structure. These vehicles can provide certain institutional investors with a more capital-efficient way to access private credit strategies.
Private Credit Fund II has already deployed nearly 40% of its commitments across approximately 50 investments in more than 10 industries. GoldenTree said the portfolio has generated a net internal rate of return exceeding 20% since inception.
The fund primarily targets larger companies with average earnings before interest, taxes, depreciation and amortization exceeding $400 million. GoldenTree focuses on transactions where borrowers or private equity sponsors require flexible financing for specific strategic or transitional needs.
The portfolio’s investments generate average unlevered yields in the double digits and carry loan-to-value ratios below 50%. A lower loan-to-value ratio provides lenders with a larger equity cushion if the borrower’s value declines.
GoldenTree said it emphasizes transaction quality rather than maximizing loan origination volume. Its approach is designed to identify financings that offer attractive returns while providing borrowers with certainty, scale and customized capital structures.
The fund uses a drawdown structure under which investor capital is called as opportunities are identified. This gives GoldenTree flexibility to invest selectively rather than deploying all commitments immediately.
Private Credit Fund II follows a predecessor fund that has invested more than 90% of its commitments. GoldenTree said that vehicle is producing a 16% net internal rate of return and a 1.4-times net multiple, which the firm described as top-decile performance compared with its selected peer group.
The first fund completed more than 100 investments, with over 40 already fully realized. Those realized investments generated unlevered gross returns of approximately 14% and had an average holding period of less than two years.
Shorter holding periods can allow the fund to recycle returned capital into additional investments. GoldenTree believes this transitional strategy can compound returns and generate higher net multiples than traditional private credit portfolios with longer-duration loans.
The firm also sees opportunities arising from recent disruptions across the private credit market. GoldenTree said the changes are not systemic but have contributed to wider credit spreads and stronger demand for lenders capable of offering large and flexible financing solutions.
GoldenTree manages approximately $70 billion across high-yield bonds, leveraged loans, private credit, distressed debt, structured credit, emerging markets, real estate and other investment strategies. The employee-owned firm has more than 320 employees across offices in North America, Europe, Asia, Australia and the Middle East.
KEY QUOTES:
“As an employee-owned firm, we are focused on delivering top quartile returns. Our solutions-oriented approach to private credit allows us to deliver unique value to issuers and sponsors and generate a premium return for our investors. Furthermore, the drawdown fund structure allows us to invest opportunistically.”
Steve Tananbaum, Founder, Managing Partner and Chief Investment Officer of GoldenTree Asset Management
“Our team, resources, and platform allow us to be highly selective, focusing on win-win transactions rather than origination volume. This approach is illustrated through the attractive profile of the Fund’s investments that enjoy on average, double-digit unlevered yields and conservative LTVs below 50%.”
“Furthermore, recent disruptions in private credit, while not systemic, are creating attractive opportunities in the asset class at wider spreads where providing certainty, scale and a range of solutions are valued.”
Lee Kruter, Partner and Head of Performing Credit at GoldenTree Asset Management
“The Fund’s oversubscription is particularly relevant in light of recent redemptions from BDCs. It illustrates the appreciation of the asset class by institutional investors, particularly managers able to deliver differentiated returns.”
“Private Credit Fund II’s inception-to-date IRR of over 20% on close to 40% of drawn capital illustrates the increasing return dispersion in the asset class. We are committed to delivering top quartile, if not top decile returns across our offerings, and are off to a strong start in this fund.”
Kathy Sutherland, Partner and CEO of GoldenTree Asset Management
