Legg Mason fixed income shop Western Asset has taken a minority stake in alternative manager Flat Rock Global.
Flat Rock Global was set up in March 2016 by chief executive Robert Grunewald and chief operating officer Richard Petrocelli.
It specializes in middle market company debt and has a closed-end fund offering in this space.
Western Asset currently offers two middle markets closed-end funds, the Western Asset Middle Market Debt fund and the Western Asset Middle Market Income fund.
John Thomson of Thomson Equity invested alongside Western Asset.
Earlier in his career, Grunewald headed the speciality finance investment banking practice at the predecessor of Wells Fargo Securities, Wachovia Securities, before working as a hedge fund manager and chief financial officer at several business development companies.
He said there would be opportunities for firm’s such as his as traditional lenders moves away from the middle market.
‘With banks receding from middle market lending, private lenders will benefit from demand for growth capital,’ he said.
James W. Hirschmann, chief executive of Western Asset, said: ‘We believe Flat Rock Global offers investors access to intriguing, yield-driven asset classes, most notably, Flat Rock Capital Corp's focus on investing in the debt of middle market companies.’
The terms of the deal have not been disclosed.