Solar Capital, Pimco co-invest $600 million in middle-market loans

By Toni Weeks

San Luis Obispo, Calif., Sept. 3 – Solar Capital Ltd. said it entered into a limited liability company agreement on Sept. 2 with an affiliate of a fund managed by Pacific Investment Management Co. LLC to co-invest in middle-market senior secured unitranche loans.

Initial funding commitments total $600 million and consist of direct equity investments and co-investment commitments, according to an 8-K filing with the Securities and Exchange Commission.

Solar Capital and Pimco have made initial equity commitments of $300 million and $43.25 million, respectively, to the joint venture vehicle, which is known as the senior secured unitranche loan program.

Pimco has also committed up to an additional $256.75 million to directly co-invest in unitranche loans alongside the loan program.

According to the filing, the Solar Capital and Pimco are in advanced discussions with third-party senior debt providers to obtain debt capital for the loan program, with targeted leverage of up to 2 times debt to equity once the program’s portfolio is sufficiently ramped.

Solar Capital is an externally managed finance company that seeks to generate current income and capital appreciation through debt and equity investments in the form of senior secured loans, mezzanine loans and equity securities.

New York-based Solar Capital Partners is the company's investment adviser.

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