BC Partners Lending Corp. to Acquire Alternative Credit Income Fund
The board of trustees of the Alternative Credit Income Fund, or ACIF, approved a definitive merger agreement with BC Partners Lending Corporation, i.e., BCPL. If approved by shareholders, the deal will transition ACIF from its current structure as a closed-end interval fund to a business development company, with BCPL as the surviving entity.
The merger is structured as a two-step process. First, a subsidiary of BCPL will merge into ACIF, making ACIF a wholly-owned subsidiary of BCPL. Immediately following, ACIF will merge directly into BCPL.
As part of the consideration, ACIF common shareholders will receive shares of BCPL common stock based on an exchange ratio derived from the respective net asset values of each fund as of a date to be determined shortly before the closing and no earlier than 48 hours prior to the closing.
ACIF reported a NAV of $9.15 per share as of Feb. 20, 2026, and total assets of approximately $177.6 million.
By merging into a BDC, ACIF shareholders will experience significant changes in how their investments are managed and regulated under the Investment Company Act of 1940.
Increased Leverage: Unlike interval funds, which generally maintain a debt-to-equity ratio of 1:2, BDCs can incur significantly higher debt, reaching a ratio of approximately 2:1. This allows for a more speculative investment technique that may increase potential returns but also raises the risk of loss.
Performance Fees: BDCs are permitted to pay capital gains-based performance fees of up to 20% to their investment advisers, a structure not typically available to standard closed-end funds unless all shareholders meet high “qualified client” thresholds.
Liquidity Changes: As an interval fund, ACIF currently conducts quarterly repurchase offers. As a BDC, BCPL is not required to maintain specific liquidity levels for repurchases. However, BCPL has expressed its intent to commence quarterly tender offers starting four full quarters after the merger closes.
To provide immediate liquidity options before the transition, ACIF will conduct a discretionary repurchase offer for up to 15% of its outstanding shares at NAV once the merger receives initial shareholder approval. Additionally, ACIF will declare a tax distribution dividend prior to closing to maintain its status as a regulated investment company.
If the merger is not approved by a majority of ACIF shareholders, a separate fee waiver agreement will take effect. Under this contingency, ACIF’s adviser, Sierra Crest Investment Management, has agreed to waive $62,500 of its monthly management fees for a period of two years.
The deal is expected to close by Feb. 24, 2027, provided all regulatory hurdles and closing conditions – including the completion of the discretionary repurchase offer – are met.
BC Partners Credit platform oversees approximately $4.2 billion in assets under management.
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