Arrow Global secures €1.5bn at third close for European NPL strategy

The London-based asset manager believes dislocation driven by covid-19 will create NPL opportunities.

Arrow Global Group has held a third close of its inaugural European NPL fund with an additional €300 million raised.

The fundraising brings total commitments to Arrow Credit Opportunities to €1.5 billion. The €300 million includes €75 million from Arrow, which has committed to investing 25 percent of the total fund alongside its LPs.

Arrow said it attracted a diverse range of investors for the latest round and now has commitments from institutions in the US, Netherlands, Canada, Switzerland, German, Italy, the Nordics and Asia.

Arrow Global CEO Lee Rochford said: “The additional €300 million in commitments is especially encouraging given the highly challenging fundraising environment. Our focus now is on deploying the proceeds into the attractive investment opportunities we have identified within our market, which have increased substantially as a result of the economic dislocation caused by the covid-19 pandemic.”

The fund was announced in 2019 with €838 million of commitments and held a second close in January. It hopes to raise a total of €2 billion by the end of 2020.

Zach Lewy, founder and chief investment officer at Arrow, said the economic crisis resulting from the coronavirus pandemic is likely to create significant opportunities for NPL investment.

“Our analysis shows that the current economic conditions we are experiencing will drive a significant increase in the volume of banking balance sheet assets sold into the market, creating an attractive market opportunity,” he said. “We believe that Arrow’s unique platform, skillset and market position means we are well placed to deploy capital into this opportunity and deliver highly attractive returns for our investors.”

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.