(Bloomberg) -- Business development company PennantPark Investment Corp. is forming a joint venture with the private credit business of Pantheon, according to a person familiar with the matter.
Pantheon has invested $35 million to acquire a 28% stake from PennantPark in a vehicle that holds $356 million in senior loans at fair value, said the person, who asked not to be identified discussing a private matter. Private markets investor Pantheon also has an option to contribute an added $30 million over time to the joint venture, called PennantPark Senior Loan Fund I LLC, according to the person.
A spokesman for PennantPark declined to comment.
Following the transaction, PennantPark's leverage will decrease by about $245 million, according to the person.
At the end of March, the BDC's regulatory debt to equity was about 140%, and the deal should reduce it to under 100%, “providing a much more robust balance sheet and more flexible capital structure,” Raymond James & Associates analysts wrote in a Tuesday note.
Pantheon, a private equity, infrastructure and real assets investor, managed about $50.7 billion as of March 31 and has been investing in private credit since 1997.
Helmed by Chief Executive Officer Arthur Penn, New York-based PennantPark is a BDC with $1.4 billion in assets, investing mainly in U.S. middle-market private companies via first-lien and second-lien secured debt, subordinated debt and equity investments, according to Securities and Exchange Commission filings. It's managed by Pennantpark Investment Advisers LLC, which has $3.7 billion of assets under management.
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