Chart of the week: Investors seek direct lending opportunities

Fund managers are gathering more capital for direct lending vehicles in 2015 as investor interest rises.  


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Direct lending vehicles are becoming the answer for investors seeking high yields in a low interest rate environment.

Iowa Public Employees’ Retirement System is one of several US pension funds actively searching for direct lending managers. It started its search for a firm to handle a $200 million-$400 million direct lending mandate last September.

The rise of investor interest in direct lending is reflected in the fundraising numbers, which show that aggregate capital gathered for closed-ended vehicles in 2015 was 32 percent above a year earlier.

Goldman Sachs Principal Investment Area closed the largest direct lending fund in 2015. GS Mezzanine Partners VI gathered $8 billion to invest globally, also making it the largest vehicle to have held a final close across the period analysed.

So far in 2016, $3.45 billion has been collected from the close of eight direct lending funds.