About Sagard

• Founded: 2016

• Headquarters: Montreal, Canada

• AUM: approximately $20bn as of 2024

• Strategy: Direct lending and private credit, with focus on mid-market non-sponsored transactions

• Track record: Credit Partners II closed at $1.5bn in 2022; Credit Partners I raised $850m in 2019

• Leadership: Founded by Paul Desmarais III; credit platform led by partners from the firm's alternative credit group

Sagard has held a $1bn first close on Credit Partners III, a senior secured direct lending vehicle targeting $2bn at final close. The fund focuses on non-sponsored borrowers — companies seeking credit outside traditional private equity–backed structures. This represents a 33% step-up from the predecessor fund's $1.5bn final close two years ago. The firm has not disclosed LP composition or deployment timeline.

The non-sponsored angle is worth watching in a market where sponsor-backed deals still command the majority of mid-market credit volume. Sagard's thesis — that quality borrowers exist outside PE portfolios — positions the fund to avoid bidding wars with the dozens of direct lenders chasing sponsored flow, but it also narrows the origination funnel. Most non-sponsored credits require proprietary sourcing, which scales slowly even with capital to deploy.

The $1bn first close suggests LP appetite is there, but deployment is the gate. Credit Partners II's vintage puts it squarely in the 2022–2023 environment when many lenders pulled forward capital deployment into floating-rate loans at wide spreads. If Sagard maintains similar pace with Fund III, the firm will be deploying into 2025–2026, when base rates are expected lower and spreads tighter — a materially different underwriting environment than the one that attracted LPs to this strategy two years ago.

Source: Private Debt Investor