Helsinki-based Certior Capital has so far raised €100 million for its second private credit fund of funds, Certior Credit Opportunities Fund II.
The firm had previously announced a €51 million first closing in August last year, and the fund has now advanced beyond the €87 million collected by its predecessor vehicle, which closed in October 2016. CCOF II has a final target of up to €300 million.
The fund is aiming for returns of 8 to 10 percent net through a pan-European portfolio of 100 or more senior secured or asset-backed loans. It focuses on the SME segment and seeks to provide cornerstone commitments for country-specific management teams.
The fund will deploy around half of its capital in primary investments and the other half in co-investments and secondary transactions. It has so far made five primary, one secondary and seven co-investments and has further deals in due diligence.
Ari Jauho, chairman of Certior, sees the smaller ender of the market becoming relatively more favourable than the larger end. “Five managers alone have raised over €25 billion for larger, sponsored direct lending opportunities in Europe in recent months,” he said. “As money has poured into this segment we clearly see it becoming less interesting as an investment opportunity.”
By contrast, Certior targets SME direct lending funds making senior loans of €5 million to €25 million to companies with EBITDA of around €1 million to €5 million and sales of €20 million to €50 million. Such loans offer “a high cash yield, attractive all-in pricing with upside potential, conservative capital structures and lender friendly terms with full covenants,” according to Jauho.
Certior is expecting a final close for CCOF II early next year. The firm has so far declined to name individual investors in the fund but they currently number around 20 and are mostly Finnish pension funds and family offices. Around half are believed to be new investors.