(Bloomberg) -- Barclays Plc and AGL Credit Management have teamed up to make a push into the burgeoning $1.7 trillion private credit market with backing from the Abu Dhabi Investment Authority.

The two firms have entered into a cooperation agreement to originate private credit loans that will give AGL exclusive access to Barclays’ deal flow. AGL will have a first look on every deal Barclays originates that includes a private credit option but no obligation to participate.

“It’s going to make us a better lender,” AGL Chief Executive Peter Gleysteen said in a phone interview, arguing that having a direct line into Barclays’ origination pipeline will give his firm an advantage over rivals. “AGL will benefit from more information than other pure-play direct lenders and asset managers.”

ADIA, which has been an investor in AGL since the firm’s founding, has committed $1 billion to the new private credit vehicle, according to a person with knowledge of the matter. Including leverage, the fund will have over $2 billion of capital available to deploy, said the person, who asked not to be named discussing confidential deal terms.

Representatives for AGL and Barclays declined to comment on the size of the ADIA commitment. ADIA’s spokesperson didn’t respond to a request for comment.

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AGL’s new private credit platform will operate as an independent manager with “complete control” over origination, asset selection, portfolio construction and portfolio management, according to a statement seen by Bloomberg News. It will focus on large corporate borrowers and invest in senior secured debt, which has higher repayment priority in the event of a default.

Large Wall Street banks that used to dominate the market for risky corporate loans have gradually lost market share to private credit juggernauts such as Ares Management Corp. and HPS Investment Partners, which have been able to offer borrowers customizable terms and more certainty over the cost of financing, particularly when public markets are more volatile.

“This is a collaboration that has been in the process for a while and its a natural evolution for Barclays, given the convergence in the market we’re seeing broadly,” said Taylor Wright, co-head of investment banking at Barclays.

Barclays initiated the discussions over a tie-up with AGL in order to be able to offer borrowers the option of a private credit financing alongside traditional bonds and loans that the bank would distribute to investors, according to a separate person with knowledge of the discussions.

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AGL has made a number of hires to build out its private credit platform, after recruiting Taylor Boswell from Carlyle Group Inc. to lead it. It’s hired at least nine professionals from Barclays including Emily Knickel as head of private credit origination and Phil Capparis as chief risk officer.

Barclays will commit no balance sheet capital to the initiative, unlike other investment banks with asset management arms. JPMorgan Chase & Co. set aside $10 billion of its balance sheet for private lending, and is seeking potential partners. Wells Fargo & Co. and Centerbridge Partners also joined forces on a direct lending fund and Goldman Sachs Group Inc. recently received $1 billion of capital from Mubadala to invest alongside in the Asia Pacific region.

The terms of the deal restrict AGL from forming partnerships with any other banks. The firm, however, will maintain the flexibility to originate its own private credit deals or participate in loans originated by other lenders.

--With assistance from Nicolas Parasie.

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