(Bloomberg) -- Amundi SA and First Eagle Investments are looking to raise as much as $5 billion for a new private credit strategy that will offer wealthy individuals in Europe, the Middle East and Asia access to private loans made to mid-size US companies.
The fund will use a perpetual, “evergreen” structure to draw high-net worth individuals who might otherwise face barriers getting into the burgeoning $1.7 trillion private credit market. It will also be open to other kinds of investors including institutions, family offices and asset managers.
Unlike traditional draw-down fund structures which require investors to make one commitment upfront and lock up their capital for as long as 10 years, evergreen investors can periodically redeem all or a portion of their stake.
Evergreen funds are “very convenient for investors who don’t want to continuously underwrite a private fund every three to five years, which can become cumbersome,” Michelle Handy, First Eagle’s chief investment officer for direct lending said in an interview. “They simply do one underwriting and then decide whether they want to allocate more or exit further down the line.”
They are gaining in popularity among private credit managers: Blackstone Inc. and Ares Management Corp. have already raised more than €1 billion ($1.1 billion) for theirs, according to publicly available filings.
In the US, individual investors have made inroads into private credit through business development companies, or BDCs, which tend to be run as publicly traded closed-end funds.
Evergreen funds “can help democratize access to private credit, in particular for more liquidity-focused investors and retail investors,” said Emma Bewley, head of credit at Partners Capital, an outsourced investment office which serves investors including endowments and foundations.
For lenders, a big advantage is they can keep fund-raising throughout the life of the fund. As of June 30, the First Eagle and Amundi strategy has raised more than $450 million from mostly institutional investors, according to spokespeople for the firms.
The tie-up stands out among European evergreen funds by deploying capital in North America. While First Eagle will ultimately invest the capital, Amundi will help attract investors based outside of the US.
Unusually, the fund will focus mostly on lower mid-market assets where pricing is better, leverage is lower and financial covenants more robust than on larger deals, Handy said.
Deals
- Oak Hill Advisors was the sole lender on a $250 million term loan facility for Emergent BioSolutions Inc. that will refinance existing debt
- Sixth Street repurchased the stake in the firm owned by partners at TPG in a transaction valuing the alternative-asset manager at about $10 billion
- Ares Management Corp. has acquired direct lending fund Riverside Credit Solutions from The Riverside Company
- Private markets investor Clearlake Capital Group LP has agreed to buy European-focused investment shop MV Credit Partners LLP from Natixis Investment Managers
Fundraising
- European private credit specialist Park Square Capital has raised €3.4 billion for a new direct-lending vehicle, according to its managing partner Robin Doumar
- HSBC Holdings Plc’s asset management group is raising commitments from investors for two strategies to expand its private credit platform, including a new one focused on energy transition-linked assets
Job Moves
- 5C Investment Partners , the private credit firm co-founded last year by two former Goldman Sachs Group Inc. partners, hired former Blackstone Inc. veteran Randall Kessler as a managing director
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(Corrects name of First Eagle Investments in lede)
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