US-based financial services company Wells Fargo and private investment firm Centerbridge Partners have teamed up to create a new fund that can lend more than $5bn to middle-market companies in North America.

Under the partnership, Centerbridge will create Overland Advisors, a new direct-lending fund that will provide loans to existing customers, with Wells Fargo as a minority investor.

Overland Advisors will provide loans to businesses with earnings before interest, tax, depreciation and amortisation (EBITDA) ranging between $25m and $100m, or above.

The fund initially targets at least $5bn in investible capital, with $2.5bn in equity commitments.

The affiliates of Abu Dhabi Investment Authority (ADIA) and British Columbia Investment Management Corp. (BCI) will initially provide up to $2bn for Overland, as anchor investors.

ADIA private equities department executive director Hamad Shahwan AlDhaheri said: “Overland represents a highly differentiated and scalable approach to direct lending in the U.S. middle market. We are excited about our anchor investment in this unique platform.”

BCI executive vice president and public markets global head Daniel Garant 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.”

Wells Fargo said that Overland represents a new business model for direct lending to middle-market companies that diversify clients served by private credit and direct lending.

Wells Fargo CEO Charlie Scharf said: “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.”

Established in 2005, Centerbridge Partners is an investment management company with a flexible approach across private equity, private credit and real estate.

With offices in New York and London, the company has around $36bn in capital under management, as of 30 June 2023.

Overland will be led by Centerbridge, as a private and alternative credit investor with an investment team that has decades of experience.

Also, it will benefit from Wells Fargo’s long-term relationships, client base and position in the US middle market and its nationwide network of relationship managers.

Centerbridge Partners co-founder and managing principal Jeff Aronson said: “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.

“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.”