Credit Suisse alumni start Asia credit fund to fill lending gap

[MELBOURNE] A group of former Credit Suisse Group AG staff, led by Australian investment banker John Wylie, has started an Asia-Pacific credit investment fund to take advantage of banks reining in lending.

Tanarra Credit Partners has raised more than A$285 million (S$221.6 million) for its Asia-Pacific Fund I, which will invest in senior and mezzanine debt, and is targeting as much as A$500 million before closing the fund to investors in the first half of 2018, managing partner Michael Tierney said.

The commitments include a cornerstone investment from A$60 billion pension fund UniSuper Management Pty for a managed account which will focus on sub-investment grade secured loan opportunities in Australia and New Zealand.

"The private credit and institutional loan markets in Australia are getting a real head of steam and providing a viable alternative to traditional fixed income," Mr Tierney said in an interview last week.

"Banks are really starting to pull back and the capital charges are really kicking in, which makes it pretty fertile ground for investors chasing private credit."

Tanarra joins a growing list of firms raising credit funds to help fill a lending gap to companies and private equity firms as new regulatory rules force banks to tighten lending standards and hold more capital.

Kennedy Lewis Investment Management, a US-based distressed-debt fund started by former Blackstone Group LP executives, raised US$250 million for its first fund, people familiar with the matter said this month, while a group of former Deutsche Bank AG and HSBC Holdings Plc plan to raise at least US$250 million for a new credit investment fund.

And hedge fund OCP Asia is said to be seeking to raise US$500 million for a fund lending to cash-strapped small- and medium-sized companies in the region.

FORMER COLLEAGUES

Mr Wylie ran Credit Suisse First Boston in Australia in the 1990s, and more recently was head of Lazard's Australian unit, a position he left in 2015. He started Tanarra Capital the same year.

Mr Tierney and Peter Szekely, who both previously worked at Credit Suisse, set up the new credit business with Mr Wylie earlier this year. The fund, which has offices in Melbourne, Sydney and Hong Kong, also recently hired Graham Lees as a managing director and Malcolm White as head of loan operations. Both Lees and Mr White had previously worked at Credit Suisse, said Mr Tierney, a former head of leveraged finance at the Swiss bank.

The majority of the core fund will be invested in Australia and New Zealand, with about one-third set aside for loans in the Asia-Pacific region, said Szekely. Tanarra sought out global pension funds, high-net worth individuals and family offices, and plans to invest in so-called performing loans to companies and buyout equity firms, he said. It won't target distressed assets or property, he added.

"We are filling the void between fixed-income and traditional private investment," Mr Szekely said. "For the pension funds, this creates a new asset class that they didn't have access to in the past."

BLOOMBERG