Alcentra invests 20% of new direct lending fund

The London-headquartered firm has executed 15 deals since November.

Alcentra has greenlighted almost €400 million ($439.8 million) in investments from its European Direct Lending Fund II (EDL II), amounting to almost 20 percent of the capital that the fund has raised so far.

The London-based investment shop has executed 15 deals in the form unitranche, payment-in-kind, senior and junior debt, alongside several equity co-investments as of 13 June, according to documents Alcentra presented to the Oklahoma Tobacco Settlement Endowment Trust (TSET) at its 11 July meeting.

EDL II, which has an 8 percent to 10 percent target IRR, set a performance fee of 10 percent, subject to a 5 percent preferred return with catch-up mechanism. The fund has a management fee of 1 percent on invested capital, including a 25 percent discount for commitments north of €75 million.

A representative for Alcentra could not be reached for comment by press time.

In total, Alcentra has invested €390 million of the €2 billion raised, as PDI previously reported. The firm already smashed its €1.5 billion fundraising goal but Alcentra has shown no plans of slowing down, as it garnered a $25 million commitment from TEST this month. A market source previously told PDI that EDL II would hold a final close by year-end.

Though the vehicle made its first investment in November, EDL II’s largest deals have come more recently.

The fund’s largest investment so far was a €63.1 contribution towards a €135.6 million unitranche loan to financial services company First Name made on 24 May. The lenders priced the facility at L+7 percent with a Libor floor of 0.6 percent. The funds also carry a 3.5 percent arrangement fee.

EDL II’s second-largest commitment was €61.7 million on a €360 million senior loan to business services company Infopro on 1 June. The facility carries a 5.8 percent interest rate and 6.6 percent arrangement fee. Other industries Alcentra’s fund has invested in include energy, business services, consumer services, healthcare and pharmaceuticals, professional audio equipment, telecommunications and consumer durables.

According to the documents, Alcentra has set a €5 million minimum commitment to the EDL II, which lends to mid-market businesses in the United Kingdom and Europe with an enterprise value of up to £500 million or the euro

equivalent.