A Bermuda firm has linked up with the world’s biggest investment management company to create a joint venture.

Hamilton’s Windward Management has signed a deal with US-based global operation BlackRock Capital Investment Corporation to create BCIC Senior Loan Partners.

The new company will target the middle-market private lending area and invest in portfolio companies — firms in which a venture capital firm, buyout firm, holding company, or other investment fund invests.

Susan Moon, co-portfolio manager and principal of Windward Asset Management, said: “We like this business due to the large underserved market that yields attractive returns and respects capital providers.

“The joint venture is positioned to source, evaluate and monitor loans to middle-market portfolio companies.

“This capability will allow senior loan partners to construct a diversified portfolio of loans with a focus on risk control.”

And Windward said that the link-up would prove attractive to island investors looking for good investments with strong returns.

Terret West, president of Windward Asset Management, added: “We are very pleased — ecstatic, as a matter of fact — that BlackRock chose to partner with us.”

Mr West said BlackRock had previously worked with Windward on a variety of projects over the years, so it knew and trusted the company.

He added that Ms Moon in previous jobs had worked closely with executives now senior at BlackRock on credit-related projects.

Mr West said changes to banking regulations in the US and Europe meant that banks no longer serviced the middle-market — firms with a top line of around the $200 million to $1 billion mark.

He explained: “There is a whole variety of hedge funds and other players going in to fill that vacuum, but this is a very large player working to aggressively pursue the business and we think it will be a very good opportunity for them and us and the industry.”

Mr West said that Windward had talked to large insurers who were interested in entering the business themselves, as it provided attractive low double-digit returns — better than more traditional fixed-income investments.

He added: “US legislation has a capital charge on non-rated borrowers — the cost of capital makes it punitive to lend to these people. Banks are focused now on lending to rated large borrowers.”

And Mr West said, as major banks laid off large numbers of staff, they had “cut out a large tranche of customers from the large banks”.

He added: “We expect that the in-depth market understanding, relationships with middle market borrowers and comprehensive loan-servicing capabilities of the joint venture will offer a solid platform and attractive yield opportunities to Bermuda investors.”

Mr West said: “Windward looks forward to broadening our relationship with BlackRock Capital Investment Corporation and building attractive investments designed for our community.”

BlackRock, based in New York, which manages assets in the region of $5 trillion, was founded in 1988 as a risk management and fixed-income institutional asset manager.