Adams Street Partners Closes $350M CLO for Private Credit

Adams Street Partners has successfully launched its inaugural middle-market collateralized loan obligation (CLO), securing $350 million in financing. This strategic move significantly bolsters the firm's private credit platform, which now manages $13.5 billion. The transaction, named ASP PIF CLO I, LLC, marks a pivotal step in expanding Adams Street's capacity to originate and manage direct lending investments, leveraging third-party capital to fuel its ongoing expansion.

The CLO structure achieved notably competitive pricing, with the AAA tranche priced at SOFR + 148 basis points, a testament to the strong investor confidence in Adams Street's credit strategy. Across the entire capital stack, the weighted average cost of financing settled at SOFR + 159 basis points. This robust execution highlights the increasing appetite for well-structured private credit vehicles in the current market environment, where discerning investors seek yield and diversification.

Bill Sacher, Partner and Head of Private Credit at Adams Street, emphasized the significance of this debut CLO, stating, "This debut CLO represents another important advancement for Adams Street’s private credit platform and reflects strong investor demand for our strategy." He further indicated that public CLOs are anticipated to become a crucial financing channel as the firm continues to scale its private credit operations. This sentiment aligns with broader market trends where alternative asset managers are increasingly utilizing securitization to access diverse funding sources.

The portfolio underlying the CLO is substantially comprised of direct lending investments originated by Adams Street, with approximately 98% of the loans already identified. This high degree of pre-funding underscores the team's proactive sourcing capabilities and its deep understanding of the middle-market credit segment. The CLO is structured with a four-year reinvestment period, providing ample opportunity to deploy capital into new opportunities and manage the existing portfolio effectively.

Tom Vuu, Principal on Adams Street’s Private Credit Team and lead for the group’s financing activity, highlighted the transaction's strong execution and investor participation. "The AAA tranche priced at SOFR + 148, an exceptionally competitive pricing level for an inaugural issuance," Vuu noted. The successful placement of this CLO not only validates Adams Street's investment approach but also broadens its financial toolkit, enabling greater flexibility and scale in its private credit endeavors. Goldman Sachs & Co. LLC served as the sole bookrunner for the transaction, with Fitch Ratings providing the credit ratings.

This development arrives at a time when private credit continues its ascent as a critical asset class. The middle-market segment, in particular, benefits from robust demand for flexible capital solutions from companies that may not have access to traditional public markets. Adams Street's strategic use of a public CLO demonstrates a sophisticated approach to capital markets engagement, allowing it to tap into a wider investor base and enhance its competitive positioning within the $13.5 billion private credit sector it oversees.