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Alcentra closes European direct lending fund on €5.5bn

The fund is the latest mega-vehicle to close this year and will focus on sponsored opportunities in the European mid-market.

Alcentra has closed its latest direct lending fund at €5.5 billion, almost double its original target.

The Alcentra European Direct Lending Fund III launched in March 2018 with a target of €3 billion to invest in pan-European private credit.

Alcentra said it saw strong demand from investors and has raised capital from institutions in Europe, the Middle East, the US and Asia. The fundraising brings total assets under management for Alcentra’s European direct lending platform to more than $10 billion (€8.9 billion).

Alcentra’s European strategy will invest primarily in sponsored transactions by providing senior debt across a range of sectors. Typical transaction sizes will vary from €20 million to €300 million and will support businesses of up to €1 billion in value. Typically, loans will be used to support leveraged buyouts, management buyouts, recapitalisations, refinancing and buy-and-build strategies.

The fund is supported by a team of 28 investment and portfolio monitoring professionals.

Graeme Delaney-Smith, co-head of European direct lending at Alcentra, said: “We are primarily a sole lender to our borrowers, which allows us to deploy significant capital with speed while maintaining close control and oversight of our investments.”

Alcentra’s previous European direct lending fund was launched in 2015 and secured commitments of €2.09 billion with a €1.5 billion target. The firm said that since 2003 it had invested more than €8.9 billion in this strategy across 229 mid-market companies. The third-generation fund is Alcentra’s largest private debt vehicle to date and one of several multibillion-euro funds to close in 2019.