8-K: PGIM Private Credit Fund Enters Sub-Subadvisory Agreement with Deerpath Capital Management

PGIM Private Credit Fund has engaged Deerpath Capital Management to manage a portion of its direct lending assets, aiming to enhance investment operations.

Summary

• PGIM Private Credit Fund has entered into a sub-subadvisory agreement with Deerpath Capital Management, effective April 24, 2025.
• Deerpath will manage a portion of the Fund's direct lending assets, making investment decisions and placing orders for securities.
• PGIM will oversee Deerpath's management, and the Board of Trustees will also provide supervision.
• Deerpath is responsible for maintaining books and records and providing reports to the Board.
• PGIM will pay Deerpath a portion of the management and incentive fees it receives from the Manager.
• The Board approved the Sub-Subadvisory Agreement on March 27, 2025, and shareholders approved it on April 1, 2025.
• The agreement is effective for two years and can be terminated by the Board, shareholders, or either party with written notice.
• The Fund declared regular and variable distributions for Class S, Class D, and Class I shares in April 2025, payable on or about May 29, 2025.
• As of March 31, 2025, the Fund's aggregate NAV was $146.1 million, with a fair value of the investment portfolio at $226.8 million and $96.6 million of debt outstanding.
• The Fund is continuously offering up to $2.5 billion in Shares and has also sold shares through a Private Offering.
• As of the date of the filing, the Fund has issued 5,336,473 shares for a total consideration of $135,294,100, including both the Offering and the Private Offering.

Sentiment

Score: 7

Explanation: The document outlines a positive development with the engagement of a new sub-subadvisor and ongoing capital raising efforts. The financial metrics are stable, and the distribution declarations are routine.

Positives

• The engagement of Deerpath Capital Management could bring specialized expertise to the management of the Fund's direct lending assets.
• Shareholder and Board approval of the agreement indicates confidence in the new arrangement.
• The Fund continues to offer shares, indicating ongoing capital raising efforts.

Negatives

• The Fund has $96.6 million of debt outstanding as of March 31, 2025.

Risks

• Deerpath will not be liable to the Manager or the Fund except for criminal conduct, fraud, negligence, willful misconduct, material breach of the agreement, or losses attributable to untrue statements or omissions in Fund documents attributable to Deerpath.
• The Sub-Subadvisory Agreement may be terminated at any time without penalty by vote of the Board or by vote of a majority of the outstanding voting securities of the Fund.
• The Sub-Subadvisory Agreement will terminate automatically in the event of its assignment or upon the termination of the Subadvisory Agreement relating to the Fund.

Future Outlook

The Fund intends to continue selling Shares in the Offering and the Private Offering on a monthly basis.

Industry Context

The use of sub-advisors and sub-sub-advisors is a common practice in the investment management industry, allowing funds to access specialized expertise in specific asset classes or investment strategies. This arrangement allows PGIM to leverage Deerpath's expertise in direct lending.

Comparison to Industry Standards

• It is common for BDCs to utilize sub-advisors to manage portions of their portfolios, especially in specialized areas like direct lending.
• Comparable BDCs, such as Ares Capital Corporation and Main Street Capital, also use various management structures to optimize investment performance.
• The fee structure, where the sub-subadvisor is paid by the subadvisor, is a typical arrangement in multi-layered advisory structures.

Stakeholder Impact

• Shareholders may benefit from Deerpath's expertise in direct lending.
• The ongoing offering provides opportunities for new investors to participate in the Fund.
• The distribution declarations provide income to shareholders.

Next Steps

• Deerpath will begin managing a portion of the Fund's direct lending assets.
• The Fund will continue to sell shares in the Offering and Private Offering on a monthly basis.
• The Board will review the Sub-Subadvisory Agreement annually for renewal.

Key Dates

Keywords

sub-subadvisory agreement, PGIM Private Credit Fund, Deerpath Capital Management, direct lending, investment management, distributions, net asset value, offering