Power Corp. subsidiary launching new credit capital fund
Sagard Holdings, a subsidiary of Power Corp., has US$260 million in commitments for a new fund that will provide credit capital to mid-market companies in Canada and the United States.
An external capital raise, a first for Sagard Holdings in Canada, drew commitments from the Healthcare of Ontario Pension Plan (HOOPP), Montreal-based private investment firm Walter Financial and BRK Capital, the single family office of a Montreal entrepreneur. A large corporate pension plan has also committed, but Sagard officials said they could not identify that investor by name.
Adam Vigna, managing partner and chief investment officer of Sagard Holdings and the new fund, Sagard Credit Partners LP (SCP), said the fund will be “agnostic” when it comes to sector. But the primary focus will be on lending to family-owned and founder-owned companies, as well as small public companies.
Founder’s Advantage Capital
The fund will be kicked off with a first investment transferred to SCP from Sagard Holdings. The $42 million senior secured credit facility to Calgary-based Founder’s Advantage Capital Corp. closed last May.
Vigna, who joined Sagard just over a year ago after nearly eight years with the Canada Pension Plan Investment Board, said he and members of Power Corp.’s Desmarais family believed the new fund would have broad appeal for external Canadian institutional investors because of the market it intends to serve and the potential returns from a combination of traditional interest payments and fees, as well as an equity component such as warrants.
They expected the fund to post annualized net returns of 10 to 12 per cent.
“We think it’s an underserved niche, an underserved market,” Vigna said, noting that the strategy would not put Sagard in segments of the market served by banks, large pensions such as CPPIB, or private equity sponsors.
Jim Walker, managing partner of HOOPP Capital Partners, said the healthcare pension is participating in Sagard Credit Partners LP because of a “compelling” combination of the fund’s team and strategy within the network of Sagard and Power Corp.
Sagard Credit Partners LP (SCP) is targeting total commitments of US$500 million by the end of 2018.
In an interview this week, Vigna, 38, said it was a difficult decision to leave CPPIB, where he ran the global principal credit investments group. But he said he “couldn’t pass up” the opportunity to work on new ventures with the Desmarais family.
More than 225 transactions have been looked at since January of 2017, with half of those in Canada, said Vigna, who worked at Goldman Sachs in New York and Toronto before joining CPPIB.
One member of his team at Sagard worked with him at both previous employers, while another two worked with him at CPPIB.