In a recent conversation with a good friend in private credit, a veteran of the industry for many years, he reminded us of the history of one-stop financing. “In the beginning,” he reminded us, “unitranche was a creature of broken markets. It was designed to step in when banks were backing away. Today it’s accelerating when capital markets are very healthy.”

The size of these financings has also grown in leaps and bounds. The 2007 GE Capital/Ares SSLP unitranche fund size totaled $3.6 billion. Today that could be filled with two deals.

How large could they get? We remember the same questions being asked about broadly syndicated loans in 2007. (Trivia question: What was the largest BSL ever done?*) Instead of syndicating externally to unrelated CLOs and funds, as the investment banks do, direct lenders allocate internally across managed funds and related vehicles.

If the largest direct lenders collaborate, and if (the bigger ‘if’) sponsors agree to club them up, a $3 billion unitranche could come sooner rather than later, perhaps by year-end. After that, it’s not hard to imagine a $5 billion uni, particularly with a large software company.