Direct Lending at First Eagle / THL Credit

I am at a college in Boston and doing my summer in levfin group (CS/UBS/BarCap). I also spent my prior summer at this same bank. I am getting along well w the team and pretty confident ill get a return offer for a FT role in this group. I enjoy being on the credit side and see myself in private credit in the long term. I have also been in touch with lot of senior members at First Eagle (THL Credit) and wanted to see what folks here think if I skip the Analyst years at the bank and start my career directly on the buyside as a Direct Lending Analyst? In the long run I would like to be at a fund that invest across the debt stack (Senior/Uni/2L/Mezz).

  1. What are your thoughts on First Eagle Direct Lending platform.. or similar first lien funds? (Assuming I get the offer at the fund)

  2. What am I going to miss if I pass on the levfin desk doing broadly syndicated deals? (Edited for clarity)

  3. Do these funds hold the entire piece on their books or are they syndicating it out as well? And how is this different than MF Credit arms?

  4. How is their underwriting process different than the lB levfin groups?

All feedbacks and advice appreciated

Comments (9)

Most Helpful
  • Associate 1 in CB
Jun 18, 2022 - 10:20am
  1. Good platform
  1. Direct lenders are getting into BSL too. You can be doing broadly syndicated deals at a direct lender. Not sure THL/FE specifically but other DLs do lead BSL deals.
  1. Depends on the fund and size of deal. For MM deals they likely get brought into a club (or lead a club if they win the lead). A bigger fund can provider a bought solution where they can commit to the whole thing. It also depends on sponsor preference. If the sponsor wants to grow the platform even if they have a bought solution they'll club the lender with others. For a larger broadly syndicated deal, the DL might hold some paper but syndicate most in the market. These BSL are lower yield for DL's appetite so they'll just take the arranger fee.
  1. Idk never worked at a bank before. I assume pretty similar on the broadly syndicated side underwriting is focusing on if they can sell the paper or not. Direct lending on the other hand focus more on the credit risk.
  • Associate 1 in CB
Jun 19, 2022 - 2:21am

Second this. I replied earlier. BSL on buyside is also very sweaty. A lot of handholding for annoying investors who get spoon fed information and will keep bothering for the smallest/insignificant information possible.

Jun 20, 2022 - 11:50am
Debtbanker, what's your opinion? Comment below:

Ill give it a stab since I've worked with First Eagle / First Eagle Alternative Credit on a few deals (I am sell side)

1) Pretty strong platform with a lot of capital deployed. Household name in credit; their direct lending arm is more focused on middle market stuff, but they do play big in BSL transactions as well (tradeable credit). First Eagle also acquired Napier Park recently so they are getting pretty passive in credit. 

2) As you know, there's a lot of overlap between sellside and buyside lev fin credit. I think one element is the financial modeling (LBO modeling acquired on the sell side) that you'll be missing going straight to DL. In DL/Credit, you are running deleveraging tests (which the sellside and/or sponsor will already give you one case and you just sensitize it). Plus being in sellside LF gives you more optionality if you want to do other buyside roles eg. PE/HF/VC/GE etc. You don't see that many exits from DL to buyouts PE

3) It depends - I believe First Eagle holds it typically, but more and more DLs are actually giving a large commitment and syndicating it to others thereafter. A big factor is the sponsor's preference - especially when you have to get a majority vote to vote for stuff like amendments etc for a sub 75mm EBITDA business.

4) It depends honestly - at my bank, the U/W process is very stringent as we do a lot of event driven deals and there is a possibility of losing a lot of money given how aggressive we go. Negotiating grids and flex packages are getting more challenging these days given mkt backdrop. But i know other banks are very loose with their process and thats how they get hurt. 

Jun 20, 2022 - 12:20pm
SketchyFinanceGuru, what's your opinion? Comment below:

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