US direct lender Tree Line Capital Partners (Tree Line) has closed a $680m (£508m) private credit continuation vehicle, with PGIM and LGT Capital Partners acting as co-lead investors.

The vehicle provides existing investors across several Tree Line direct lending funds with a liquidity option while enabling Tree Line to continue managing a diversified portfolio of private credit investments.

“The transaction underscores our ability to work with blue-chip partners like PGIM and LGT Capital Partners and deliver attractive capital solutions to our investors,” said Tom Quimby and Jon Schroeder, co-managing partners at Tree Line. “The result of the transaction will contribute to Tree Line’s ability to offer attractive financing solutions to lower middle-market borrowers and sponsors,” they added.

Read more: Delayed refinancing drives surge in private debt secondaries

The continuation vehicle acquired a portfolio primarily consisting of senior secured, first-lien loans to more than 60 US lower middle market companies across a broad range of industries, supported by a diverse group of private equity sponsors.

“As the private credit secondaries market grows and evolves, we are seeing continuation vehicle solutions gain traction across a broader range of portfolio sizes, including mid- and small-cap investments,” commented Alex Stuart, head of private credit secondaries at PGIM.

At the beginning of this year, PGIM said it was expanding into private credit secondaries, with plans to deploy up to $1bn over two years. The initiative focuses on general partner and limited partner opportunities across direct lending and opportunistic private credit, with a particular emphasis on middle-market transactions in the US and Europe.

Read more: Tree Line bags $1.1bn for fourth direct lending fund

Meanwhile, private credit investor LGT Capital Partners has had a focus on credit secondaries since 2009. “Credit secondaries have become an increasingly important tool for managers and investors, and we see a deep and growing universe of opportunities,” said Felix Janssen, partner and co-head of private credit solutions at LGT Capital Partners.