HPS raises €800m for European asset-based loan fund

The US firm will target loans backed by transportation assets as it continues to see opportunities open up in Europe as banks continue to deleverage.

HPS Investment Partners has reached a final close on its European asset-based lending fund after raising €800 million in capital commitments.

The New York-headquartered firm, which also has offices in Europe and the Asia-Pacific region, announced the final closing of its debut European Asset Value Fund yesterday.

The fund’s strategy is to invest in loans made to European small and medium-sized enterprises backed by a range of transportation vehicles, including aircraft, cars and trucks, and information technology equipment.

“We believe that the current market conditions in Europe will afford us the opportunity to acquire a highly diverse pool of performing assets alongside related origination and servicing platforms,” said Jonathan Ashley and Justin Staadecker, co-heads of HPS’s European Asset Value Fund.

Part of the trend driving opportunities in Europe is the banks’ continuing reduction of their lending activities in the European mid-market, said the firm. Scott Kapnick, chief executive of HPS, said that “regulatory induced deleveraging of the European banking sector has created a strategic opportunity to acquire performing non-core asset portfolios and platforms”.

It is the latest fund to be closed by the current HPS Investment Partners team following the management buyout from JP Morgan Asset Management and Highbridge Capital Management which was completed early last year.

Towards the end of December, the firm closed its third mezzanine fund after collecting $6.6 billion from investors, among the largest capital fundraises in 2016. The fund targets junior debt investments in the North American and Western European market and raised over $1 billion more than the previous incarnation of the vehicle.

Notable investors in the mezzanine fund include the Teachers’ Retirement System of Louisiana and Arizona State Retirement System.

As of December, the firm had $34 billion of assets under management.