T. Rowe, Oak Hill partner on private credit fund for mass affluent market

investmentnews.com:

T. Rowe Price Group Inc. and Oak Hill Advisors are launching a new private credit fund open to individual investors in the U.S. to take advantage of the rapidly growing $1.5 trillion market.

The T. Rowe OHA Select Private Credit Fund, or OCredit, already has $1.5 billion of investible capital, according to a statement seen by Bloomberg News. That includes more than $600 million raised in equity commitments from T. Rowe and a group of global institutional investors, with the offering now opening to individuals, it said.

T. Rowe Price, which has $1.4 trillion of assets under management, acquired Oak Hill in late 2021 to expand into alternative markets. Oak Hill is one of the biggest names in direct lending, and recently led on the record-setting $5.3 billion loan package funding Vista Equity Partners’ refinancing of Finastra Group Holdings Ltd.

OCredit follows the example pioneered by Blackstone Inc. with its BRED fund, which now has about $48 billion of assets under management. It’s structured as a non-traded perpetual business development company — a modified version of the BDCs that were established by the U.S. government in the 1980s to facilitate lending to small and midsize firms. In a modified BDC, investors have the option to withdraw their capital, though with a quarterly cap. Similar funds of this type limit investors to those with a net worth of $250,000 or an annual income and net worth of at least $70,000 each.

The fund invests primarily in senior secured loans to larger, well-established companies located mainly in North America, according to the statement. Oak Hill is responsible for lending and managing the fund, while T. Rowe is distributing it, according to people familiar with the matter who aren’t