German platform posts first close on debut direct lending fund

Creditshelf, a Frankfurt-headquartered lending platform for German SMEs, has raised €62 million at the first close of its debut direct lending fund, which has a final target of €150 million.

The fund, which has a six-year maturity and will provide senior financing, is backed by anchor investor the European Investment Fund, which provided a €30 million commitment. Creditshelf’s shareholder base has also provided funding, including “seven-figure” commitments from the firm’s co-founders, Daniel Bartsch and Tim Thabe.

In an interview with Private Debt Investor, Bartsch said the fundraising would be ramped up over the next 12 to 18 months, with further interim closes expected during that period. He added that the firm had been prompted to launch the fund after discussions with the EIF, which was keen to back creditshelf but could only invest through a loan structure rather than directly into the company.

Bartsch said the fund will lend senior finance alongside banks on an unsecured basis. He said the firm has delivered an average coupon of 8.4 percent over the last year and is aiming for a net return from the fund of 5 percent after costs.

Amid the emergence of the covid-19 crisis, creditshelf saw a 69 percent increase in loan requests to more than €500 million compared with the same quarter last year. However, Bartsch said the firm had been cautious on converting the opportunities, which involved making judgments on firms’ capacity to make repayments.

He said there was a huge need for liquidity from German SMEs and many were struggling to access loans from government programmes – some of which were supposed to have dispersed all their funds by now, but which many applicants have still not received.

Bartsch also pointed out that not all opportunities are the same. “It’s not just the desperate and the cash-drained, but also decent business models that need to be financed. For example, we have seen great online pharmacies that need funding and which can do really well in this climate. The banks often won’t provide finance because they are swamped and are only looking at their existing client base.”

He admitted that the crisis would provide the test of lending platforms that investors have been waiting for to see whether the business model can prove itself through tougher times. But he expressed confidence given the granularity and diversification of creditshelf’s portfolio across regions and sectors and said he was still seeing “very normal behaviour” from the firm’s borrowers.