Wells Fargo (WFC.US) partners with Centerbridge Partners to develop a total loan business of US$4.8 billion

The Zhitong Finance App learned that according to reports, Wells Fargo Bank (WFC.US) and private equity firm Centerbridge Partners have cooperated to complete a direct loan transaction of 2 billion US dollars so far this year, bringing the total amount of funds deployed to 4.8 billion US dollars.

Centerbridge Partners' Overland Advantage has so far collaborated with Wells Fargo to complete nine transactions, including preferential lien term loans to beverage dealers Southern Crown Partners and Hand Family Cos.

According to reports, Overland Advantage is managed by an entity controlled by Centerbridge Partners, and Wells Fargo holds a non-controlling minority interest in it. Overland first began investing in the second quarter of last year.

The two sides have cooperated to complete 16 transactions, mainly with North American companies not owned by private equity.

Bill Neuenfeldt, senior managing director and chief operating officer of Centerbridge, said, “The owners of these businesses may be less familiar with private credit, but Overland has enabled us to introduce them to the service through individuals they've known for years.”

As the M&A market continues to be sluggish, banks and private credit institutions have expanded their scope of business to find deal opportunities. In theory, collaboration between the two could provide a wider range of opportunities for lenders.

David Marks, executive vice president of commercial banking at Wells Fargo, said: “These customers needed direct loan solutions, which we were unable to provide before Overland was founded.”

As banks cede market share to private credit institutions, partnerships between banks and direct lenders have sprung up in a variety of forms. Banks have more stringent loan requirements, and their risk appetite is different from that of non-bank financial institutions.

Marks said, “To be successful, we need to coordinate the interests of all parties. To this end, we often have open and honest communication to develop an appropriate loan structure for borrowers.”