August 18 (Preqin News) – Private credit manager Hayfin Capital Management has raised more than €6bn ($6.5bn) for its latest direct lending fund, the largest European private debt fund to close this year, according to Preqin data.
Hayfin Direct Lending Fund IV will target middle- and upper middle-market companies in Europe, the London-headquartered firm announced on Friday. Combined with unspecified, related investment vehicles, total available capital for the strategy will reach, or near, a €7bn ($7.6bn) hard cap by the end of the year.
Direct lending’s attractiveness has been burnished in recent years by the protection against inflation offered by floating rates, while further tightening in the banking sector has led firms to increasingly turn to private lenders.
However, direct lending accounted for nearly half of total global private debt fundraising in Q2, with $23.4bn raised by 16 funds, according to Preqin’s latest quarterly update. A substantial increase when compared with $4.7bn raised in the first quarter of 2023.
‘The recent market dislocation and the sluggish recovery of the leveraged finance market presents another attractive environment for Hayfin to deploy capital into both mid-market and upper-mid-market financings,’ said Tim Flynn, Chief Executive Officer and Co-Founder of Hayfin in a statement.
Capital commitments for Direct Lending Fund IV were received from new and existing LPs, including public and private pension funds, sovereign wealth funds, financial institutions, and funds of funds, Hayfin added. Founded in 2009, the firm has approximately €30bn ($32.6 bn) in AUM.
According to Preqin Data, there are currently 550 direct lending funds in market, with an aggregate target size of $241.9bn. North America accounts for the vast majority, with 329 funds currently targeting $122.8bn, followed by Europe with 126 funds targeting $95.8bn.
Oaktree Capital Management announced this March that it was targeting $10bn in equity commitments for a new private credit strategy. Oaktree Lending Partners, would aim to ’capitalize on dislocation in the large-cap LBO financing market‘, the firm said, and will ’seek to originate senior secured loans of $500mn or more to private equity-owned US companies.’
Speaking at the time of the announcement, Oaktree’s Co-Founder and Co-Chairman Howard Marks, said: ‘The need for this type of lending is significant, but we anticipate limited competition given the retreat of banks from this area and the dearth of nonbank lenders with the requisite scale, flexibility and credit expertise.’