Socium Fund Services is expanding its private credit offerings to GPs with loan agency features.
The services firm already provides loan administration for its private credit clients, Jason Meklinsky, chief revenue and strategy officer, told Private Funds CFO, and it will offer the agency and admin services both a la carte and in a bundle options.
The fund administrator’s move marks an effort to capitalize on momentum in the asset class, according to Harvey Tian, head of loan agency and administration.
“With the continuing consolidation of the middle-market banking landscape and global economic dynamics, the rise in private credit and associated demand for external loan agency and administration services finds Socium primed to respond,” Tian said in a statement.
Tian joined Socium, a division of Sunterra Global, in May after working for about five years at Alter Domus, where he was most recently a senior associate for loan agency services, a spokesperson confirmed. He was recently made head of loan agency and administration, having been originally brought on as an associate director for the platform.
Socium is looking to offer more services in a space where sponsors have been keeping their loan activities separate from other fund administration tasks.
“The reality of the situation is a fair amount of the new entrants to the market in private credit – and existing managers – are in some cases using a separate administrator to do the loan admin and loan agency portion of it because it’s such a specialty vertical within the fund admin space,” Meklinsky explained.
Agency work has often been handled internally by private credit funds, he said.
An overview from Socium shows that its loan agency services include reviewing legal documents, collecting and disbursing payments, conducting daily cash reconciliation, audit confirmation and maintaining agent bank accounts.
The firm’s loan administration functions include covenant management, setting up new assets, reconciliation of assets, providing ratings updates, and processing participations, assignments, waivers and amendments.
LPs have an incentive to want a stronger loan agency function, Meklinsky said. This is because investors’ capital is transferred outside of private credit funds and to third-party borrowers, unlike with buyout vehicles where the capital is used to purchase companies.
Meklinsky explained that private credit managers depend on their outside borrowers for getting financial details for verification, unlike their buyout counterparts who can obtain the data from companies that they own.
An offering that would give GPs’ front offices access to certain data to use for investment pipelines and risk management is currently in beta testing, Meklinsky said. Further down the line, the firm is interested in adding capability for secondary debt trading.