Arrow Global holds €1.1bn close for NPL fund

The firm intends to raise €2bn by the end of the year, and said there are huge opportunities as banks continue to dispose of non-core assets.

Arrow Global has held a close of its inaugural European non-performing loan fund at more than €1.1 billion ($1.22 billion).

The firm announced Arrow Credit Opportunities had raised €838 million in December last year and is targeting €2 billion by the end of 2020.

Arrow Global is committed to investing 24.9 percent of the vehicle’s total funds and has raised the remaining €826 million from institutional investors across a range of geographies and sectors.

The fund will invest in select European credit opportunities in secured and unsecured defaulted, non-core loan portfolios and real estate. It will focus on investing in Italy, Portugal, the UK, Ireland and the Netherlands. Arrow will act as both servicer and investor and has an in-house operating platform and in-country investment professionals to support the investment team. The vehicle has an eight-year, closed-ended structure.

Arrow said there are current and prospective market opportunities driven by regulatory tailwinds as banks seek to restructure their balance sheets, with more than €2.1 trillion ($2.33 trillion) of assets that must be sold to meet capital ratios.

The firm already has £53 billion ($69.13 billion; €62.28 billion) of assets under management and during 2018 its debt investments delivered an IRR of 17 percent.

The firm said AGG Capital Management, the Jersey-incorporated portfolio manager to the fund, will receive a “market standard” management fee for its services and “have the opportunity to generate additional performance-based returns once certain investment targets are met”. AGG will also receive servicing revenue in return for providing collection services to the fund.

Arrow is headed by group chief executive Lee Rochford, who joined in January 2017. He was previously chief financial officer at Virgin Money between 2013 and 2015.

Commenting on the fundraising, Rochford said: “This first successful fund raising is transformational for the Group. It shows we are successfully executing our strategy to transform the business through the build-out of our fund management capabilities and represents our continued drive to engage with capital partners and grow our assets under management.”