Arcmont closes senior debt fund at €5bn hard-cap

The firm raised the fund at the height of the covid-19 pandemic and it is on course to be fully deployed in the coming months.

London-based manager Arcmont Asset Management has closed its latest debt fund above target at €5 billion.

The vehicle, Senior Loan Fund II, reached a first close in March 2020, as the covid-19 pandemic hit. Its initial target was €4 billion but in August it held a final close at its hard-cap.

More than half of the fund commitments were from existing investors in Arcmont funds. The investor base includes pension funds, insurance companies, sovereign wealth funds and family offices based in Europe, the US and Asia-Pacific region.

Senior Loan Fund II has already committed around 60 percent of its capital. Arcmont chief executive Anthony Fobel told PDI he expects the fund to be fully deployed before the end of 2021.

It will invest in upper mid-market European companies with a focus on defensive industries with stable cash generation. The vehicle aims to provide strong cash yields with attractive risk-adjusted returns. It will emphasise preservation of capital with conservative deal structuring, including full covenants and downside protection.

The fund has a four-year investment period from first close, meaning it will be able to recycle capital from current loans during the investment period to enable investors to remain fully committed for much of the fund’s lifespan.

Arcmont also revealed it has committed approximately €5 billion of capital over the past 12 months, a record for the firm, which spun out from BlueBay Asset Management in 2019.

“This year, we have deployed record amounts of capital to support strong and growing European companies in the wake of the Covid-19 pandemic, and the robustness of our portfolios reflects the resilience of the asset class and the increasingly vital role that private debt plays in Europe’s financial ecosystem,” Fobel said.