European credit group Hayfin Capital nears buyout deal

Stay informed with free updates

Simply sign up to the Private equity myFT Digest — delivered directly to your inbox.

Sports investment group Arctos Partners is in advanced talks to buy a majority stake in European credit investment shop Hayfin Capital Management in tandem with its top executives, according to people with knowledge of the matter.

Arctos has partnered with top Hayfin executives, including co-founders Tim Flynn and Mark Tognolini, in the deal, which is expected to hand a majority of the common stock owned by the British Columbia Investment Management Corporation (BCI) to the management team when it is completed. 

The deal values Hayfin, which manages more than €30bn, at $1.3bn, the people added.

The buyout was seen by a handful of rivals as a way to rapidly expand in European private credit, and it attracted the interest of MetLife as well as Todd Boehly’s Eldridge Industries, the people said.

Publicly traded asset managers have been scrambling to build up their presence in the $1.7tn private credit market, and acquisitions of credit investment shops have been viewed as one way to catapult ahead.

Private lenders such as Ares and Blackstone grew dramatically after the Federal Reserve began raising interest rates in 2022, which sent shockwaves through markets and prompted traditional banks to pause much of their lending to riskier businesses.

The US regional bank crisis last year accelerated private credit’s ascent, as the funds drew in big investors and insurers attracted by the returns on offer.

Earlier this year, top executives at Hayfin decided against selling the entirety of the business and began discussions over how to fund a buyout themselves as its Canadian pension plan backer looked for an exit.

Arctos, which has made a name for itself with its investments in the Boston Red Sox baseball team and the Paris Saint-Germain football club, last year launched a business line to invest, advise and provide financing to asset managers called Keystone. Axios has reported it is raising $4bn for the strategy, which is where the Hayfin investment will sit.

BCI invested in Hayfin in 2017. Hayfin’s assets have subsequently risen more than fourfold and its most recent flagship European private credit fund pulled in more than €6bn from investors, making it one of the 20 largest direct lending funds ever raised, according to data provider Preqin.

Hayfin has broadened its business beyond its core private credit lending, hiring managers for liquid credit investments. It recently financed buyout group Eurazeo’s acquisition of French retirement plan operator Eres. Hayfin was started in 2009 after the financial crisis by Flynn and Tognolini, who had worked on leveraged buyouts while at Goldman Sachs.