CVC targets at least $500m for initial US direct lending pooled fund – exclusive

The firm gained North American exposure with the acquisition of Northport Capital.

CVC Credit Partners is raising its first commingled fund for US senior secured loans after moving into the market with a large separately managed account.

The London-based firm is seeking at least $500 million for its CVC Credit Partners US Direct Lending Fund II, according to sources familiar with the situation. For its US debut, CVC invested out of a $300 million SMA, which was levered at a 1:1 ratio, the sources said.

The firm has raised at least $87.5 million for the latest vehicle, according to regulatory filings with the Securities and Exchange Commission. Fund II will invest mainly in companies with $10 million-$75 million of EBITDA across an array of industries. The firm is also raising a business development company, CVC Credit Partners BDC, according to another SEC document.

CVC declined to comment on the fundraising.

In August 2016, the firm acquired Northport Capital – the North American direct lending arm of Resource Capital Corporation. CVC head of US mid-market lending David DeSantis joined the firm via the transaction, as he was previously Northport’s head of mid-market lending, according to CVC’s website.

CVC closed its maiden European direct lending fund on €500 million last year, one source said.

Recent transactions include a £218 million ($283.7 million; €244.8 million) senior and subordinated loan refinancing package for Paymentsense – a European business that allows small and mid-sized businesses to accept credit card payments – and backing Palamon Capital Partners’ acquisition of Thomas International, an aptitude test provider for businesses.

CVC’s European private debt business also brought on Natalia Nowak, former managing director of ESO Capital, last week as a managing director. She will focus on investment opportunities in Austria, Germany and Switzerland. Last fall, the firm hired its current chairman, Hamish Buckland, formerly of JPMorgan.

Other European credit managers that have expanded their direct lending business to the US in recent years include Stockholm-based EQT Partners and London-based Intermediate Capital Group.

EQT closed its initial US fund at $726 million in October 2016, according to a media report at the time. ICG is on its second US fund – ICG North American Private Debt Fund II – which has raised $873 million, according to its 2018 annual report released in May. Fund I collected $590 million.

CVC Credit Partners manages $18.9 billion in assets across performing credit, credit opportunities, special situations and private debt. CVC Capital Partners, the firm’s private equity platform, closed its seventh flagship fund, CVC Credit Partners VII, on a recording-setting €16 billion. That included €15.5 billion of equity commitments and a €500 million general partner commitment, PDI sister publication Private Equity International previously reported.