EQT mid-market direct lending fund closes on €530m

The fund provides long-term capital solutions to European mid-market companies. So far, around 30% of it has been deployed.

EQT Mid-Market Credit Fund, the credit platform of private equity firm EQT, has closed its first fund focusing on direct lending to European middle-market companies after raising €530 million, surpassing its initial target for the fund of €500 million.

The fund was launched last year and so far 30 percent (€160 million) has been deployed across five deals in Europe. The transactions include companies in the healthcare, industrial and telecommunications sectors in the Nordic region, Germany and the UK. EQT declined to disclose the fund’s IRR target.

Pension funds, insurance companies and family offices have committed capital to the credit fund. The fund provides long-term debt capital options to European middle-market companies and reached its first close in May 2015 after raising €350 million. It lends capital to support the growth of a company, acquisitions and refinancing.

Paul Johnson, portfolio manager at EQT Partners, told PDI that the appetite to invest in middle-market companies has increased. “Mid-market companies historically relied on banks for funding, but such companies are now demanding more flexible terms for lending. While banks are not necessarily exiting the market, private lenders can be a little more creative with the structure of its financing,” he said.

EQT is a private equity group that has raised around €29 billion from investors globally. The EQT Credit team was established in 2008 and serves as an investment advisor to the firm’s credit platforms. The platform is currently investing in three different debt strategies, which includes senior debt, direct lending and credit opportunities.