PGIM has agreed to acquire the remaining 25 per cent stake in Deerpath Capital, taking full ownership of the US lower middle market direct lender.

The transaction follows PGIM’s acquisition of an initial 75 per cent interest in Deerpath in May 2023 and remains subject to regulatory approval.

The deal will expand PGIM’s direct lending capabilities by combining Deerpath’s lower middle market business with PGIM’s existing core middle market and large-cap lending operations. The combined platform will manage around $16bn (£12bn) of assets and employ 55 investment professionals, according to the firms.

“As direct lenders have scaled, many have moved into the large-cap segment,” said Matt Harvey, PGIM’s global head of middle market direct lending. “We continue to believe the traditional middle market remains an attractive and important segment for borrowers and investors.”

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Harvey said full ownership would create a more coordinated and scaled direct lending platform while retaining the investment discipline that had supported Deerpath’s performance.

The enlarged business will provide financing across the lower middle market, core middle market and large-cap segments, covering both private equity-backed and non-sponsored companies.

PGIM said the deal would also improve sponsor coverage, investor distribution and client service, while allowing the firm to offer more tailored financing solutions as borrowers grow and move between different parts of the market.

Deerpath Capital chief executive James Kirby said PGIM’s capital resources, asset management expertise and global relationships made it an “ideal home” for the business.

“Tas and I have developed an excellent working relationship with our colleagues at PGIM, and we look forward to the next chapter as part of the comprehensive PGIM Credit platform,” he added.

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