The Private credit firm 5C Investment Partners, Co-founded by former Goldman Sachs partners Tom Connolly and Michael Koester, has amassed $1.6 billion for senior direct-lending transactions.
The firm will begin investing the raised capital, which includes leverage and a co-investment program. Liberty Mutual Investments and Michael Dell's family office, DFO Management, have joined as anchor partners in this venture.
The founders stated that the private credit sector they are targeting is nearly $2 trillion in scale and continues to expand, offering ample opportunities for both private capital providers and banks.
5C Investment Partners is focusing on the upper-middle market, with their target investments generally ranging in size between $20 and $300 million. They primarily target companies with $50 million or greater of annual EBITDA, though they may occasionally invest in smaller companies.
As for target industries, 5C expects to focus on transactions in:
- Software
- Business services
- Parts of the health-care sector
- Other recession-resistant industries
5C Investment Partners Platform Architecture
Core Investment Parameters:
- Investment Range: $20-300 million
- Target EBITDA: $50 million+
- Primary Focus: Upper middle market
- Geographic Concentration: U.S.-domiciled companies
Technical Stack Components:
- First Lien Debt:
- Stand-alone first lien loans
- Unitranche facilities
- First lien secured bonds
- Secondary Components:
- Second lien debt
- Unsecured debt
- Strategic equity positions
Risk Management Framework
Multi-Layer Protection System:
- Primary Protection Layer:
- Senior secured position
- First-lien priority
- Comprehensive covenant packages
- Secondary Protection Layer:
- Private equity sponsor backing
- Management team equity alignment
- Board observation rights
Economic Model
Fee Structure Design:
- Management Fee: 0.60% (pre-listing), 1.00% (post-listing)
- Hurdle Rate: 6% annualized
- Performance Fee: 10% (pre-listing), 17.5% (post-listing)
Capital Efficiency Metrics:
- Asset coverage ratio: 150%
- Leverage optimization
- Float rate emphasis
This technical architecture demonstrates how modern alternative lending platforms can be structured to optimize both risk management and market opportunity capture while maintaining institutional-grade operations.
Our Opinion
They've got a clever setup that balances really well between keeping risks low and snagging the best market opportunities.
Their system has layers—like an onion—of protection that work together with a unique origination engine focused on sponsors. This combo could basically set an example for how to rock the market. Although, it's a bit early to throw a celebration since no one's seen it in full swing yet. Alternative Lenders must observe how well they can actually play out their strategies, pick the right credits, and move through the economic cycles.
For anyone in the lending space, keeping an eye on 5C could provide some juicy insights into crafting top-tier lending platforms.
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