Investment firm PGIM winds down a $4.2 billion fund focused on credit facilities for mid-sized companies in the private lending sector.
PGIM, a leading global investment management firm, has announced the launch of a new Collateralised Loan Obligation (CLO) fund. This fund, focusing on directly originated senior loans across various industries and borrower types, aims to provide senior secured financing to middle market companies across North America, Europe, and Australia[1][4].
The strategy underpinning this fund sets PGIM apart from traditional approaches. Unlike many competitors, PGIM's middle market direct lending strategy prioritizes non-sponsored companies, which constitute over 90% of the middle market[2]. This approach allows PGIM to originate senior secured loans directly to a broader set of middle market borrowers, including family-owned and non-private equity-owned firms[1][4].
This direct origination approach contrasts with the common industry focus on sponsor-backed deals and allows PGIM to leverage its proprietary deal flow and deep underwriting capabilities built over years, mitigating information asymmetry in private credit markets[1][4]. PGIM’s emphasis on bilateral, direct lending at scale creates a broader, more selective pipeline of loans with underwriting advantages[1][4].
The strategy offers several advantages for investors:
- Greater diversification: By accessing a large, underpenetrated segment of the middle market outside of sponsor-backed transactions, investors can reduce concentration risk[1][2].
- Lower risk and more stable returns: The fund targets companies with conservative leverage, predictable cash flows, and longer-term partnerships, often family-owned firms emphasizing sustainability over rapid exits[2].
- Attractive risk-adjusted returns: Senior secured loans in the non-sponsored segment have historically lower default rates than industry benchmarks[2].
- Reduced correlation to public markets, offering investors uncorrelated exposure to private credit opportunities in an uncertain economic environment[2].
Matt Harvey, head of middle market direct lending at PGIM Private Capital, stated that capturing both sponsored and non-sponsored channels is a differentiator for the fund[3]. Harvey also mentioned that in a market characterized by information asymmetry, direct bilateral origination at scale provides an advantage[3].
The combined platform manages nearly $1 trillion in assets under management[4]. Investors in PGIM Senior Loan Opportunities II, L.P. (PSLO II), PGIM's second commingled private credit fund open to unaffiliated investors, include insurance companies, pension funds, and sovereign wealth funds[4].
The integration of PGIM's fixed income and private credit businesses into a single global credit capability was announced in June 2025[5]. In the US, there are approximately 200,000 middle market companies, and only about 10,000 are private equity owned[5]. The strategy of the new CLO fund aims to achieve diversification and deployment targets for investors by capturing both sponsored and non-sponsored channels[5].
Sources: [1] PGIM Press Release, "PGIM Launches $4.2 Billion Middle Market Direct Lending Fund," 2025. [2] Matt Harvey, interview with The Financial Times, 2025. [3] Matt Harvey, keynote address at the Private Debt Investor Forum, 2025. [4] PGIM Annual Report, 2025. [5] PGIM Investor Presentation, June 2025.
PGIM's new CLO fund, specializing in asset management within private markets, differentiates itself from competitors by focusing on non-sponsored companies and employing a direct lending strategy at scale, offering advantages such as greater diversification, lower risk, and attractive risk-adjusted returns for investors. This approach, unique in the industry, leverages PGIM's proprietary deal flow and deep underwriting capabilities, providing uncorrelated exposure to private credit opportunities.
The launch of this fund reflects PGIM's finance business strategy, aimed at capturing both sponsored and non-sponsored channels to diversify and deploy assets under management, and is an integral part of their recently integrated global credit capability.
