Centerbridge Partners and Wells Fargo are entering into a strategic relationship focused on direct lending to non-sponsor North American middle market companies. To meet the alternative credit needs of this segment, Centerbridge intends to launch Overland Advisors to manage a newly formed business development company that will be primarily focused on making senior secured loans. Overland represents a transformative new business model for direct lending to middle-market companies, diversifying the market of clients served by private credit and direct lending.

The Centerbridge and Wells Fargo strategic relationship includes differentiated origination sourcing from Wells Fargo’s extensive middle market customer base and an equity investment from Wells Fargo. In addition to expanding financing access to the non-sponsor segment, Overland will pursue other transactions, including traditional sponsor-backed direct lending opportunities.

Overland Advisors is targeting a minimum of $5 billion in investible capital, including $2.5 billion in equity commitments for this strategy. Anchor investors, including wholly owned subsidiaries of the Abu Dhabi Investment Authority (ADIA) and British Columbia Investment Management Corporation (BCI), have committed to provide nearly $2 billion in initial equity commitments.

“Overland represents a new paradigm in direct lending, bringing a relationship approach to direct lending and offering a much-needed capital solution in the large but underpenetrated non-sponsor U.S. middle market,” Jeff Aronson, co-founder and managing principal of Centerbridge Partners, said. “We believe Overland draws on the unique and complementary capabilities of both Centerbridge’s leading private credit underwriting capabilities and Wells Fargo’s nationwide sourcing and origination network to offer an attractive new proposition for borrowers in the private lending and direct credit space at a particularly compelling time.”

“As a leader in U.S. middle market and asset-based lending, we are continually focused on finding ways to best serve our clients, and Overland can offer them options for alternative capital structures that can be used to pursue a broader set of growth and value creation initiatives across a variety of market conditions,” Charlie Scharf, CEO of Wells Fargo, said. “Working with Centerbridge under our sourcing relationship will help us elevate our support of middle market clients.”

“Overland represents a highly differentiated and scalable approach to direct lending in the U.S. middle market,” Hamad Shahwan AlDhaheri, executive director of the Private Equities Department at ADIA, said. We are excited about our anchor investment in this unique platform.”

“Direct Lending provides an important alternative financing source for middle market businesses,” Daniel Garant, executive vice president & global head, Public Markets, BCI, said. We believe Overland takes that to the next level by broadening and diversifying the types of businesses served, and we are pleased to be making this meaningful long-term investment.”

The sourcing relationship between Overland Advisors and Wells Fargo will provide an innovative, relationship-driven approach to direct lending that meets the capital needs of Wells Fargo clients and other non-sponsor owned middle-market businesses by providing important financing capacity and access to capital for family-owned and other privately owned businesses in North America that have limited connectivity to private credit. Harnessing Centerbridge and Wells Fargo’s strengths and scale and building on their respective track records and deep relationships, Overland will be well positioned to offer a differentiated client experience for borrowers.

Overland expects to leverage Centerbridge’s recognized leadership as a private and alternative credit investor, with a seasoned investment team that has decades of experience creating innovative solutions and underwriting credit investments. It also expects to benefit from Wells Fargo’s long-term relationships, extensive client base and leading position in U.S. middle market and asset-based lending, supported by a nationwide network of relationship managers in 49 out of 50 of the largest markets across the country.

Overland Advisors will be controlled by Centerbridge Partners, and Wells Fargo will be a minority investor.