L&G steps up activity in private debt

The London-headquartered insurer and investment manager has lent £90m to one of its property funds on the back of its €250m commitment and 40 percent stake in a new European direct lending platform.

Legal & General’s lending arm has participated in the £350 million (€443.2 million; $596.8 million) refinancing of its Industrial Property Investment Fund (IPIF), according to a statement.

The property fund, which invests in the UK industrial real estate market and which L&G also operates, has agreed a £275 million term part fixed-rate, part floating-rate facility with three lenders including LGIM Commercial Lending Limited (CLL), RBS and Wells Fargo. An additional £75 million revolving credit facility (RCF) has been provided by the two banks, split 50:50 between them.

The new six year secured facility replaces a £210 million arrangement that was due to mature in September 2015 and will see the fund through to the end of its life. CLL has increased the size of its stake in the facility from £75 million to £90 million. RBS continues to be the main debt provider and arranger with a £95 million stake in the secured facility, upped from £90 million. Wells Fargo arrives as a new lender providing £90 million to the term loan along with its RCF investment. 

Ashley Goldblatt, head of commercial lending at Legal & General Investment Management, commented: “Acting as a co-lender alongside banks, providing floating rate finance and lending for as short a term as six years are three stances that the market would not ordinarily associate with us. We are delighted therefore to have this opportunity to show that we can compete successfully in these areas.”

The news follows an announcement last week that Legal & General is to become an investor in alternative asset manager Pemberton Asset Management Holdings, which is launching a new direct lending platform for institutional investors.

Pemberton plans to provide loans and private placements to mid-market companies in the UK and Europe, focusing on those with turnover between €100 million and €1 billion.

Legal & General has subscribed to a 40 percent stake in Pemberton and has made an initial commitment to invest €250 million in the new platform. It also said it intends to make further significant future commitments to the platform.

Paul Stanworth, managing director of Legal & General Capital, said in a statement: “The UK and Europe have been too dependent on bank financing, and this impacts particularly on businesses wishing to invest and expand. Creating a new channel to deploy longer-dated institutional money in the mid-market sector will help drive economic recovery at a time when bank balance sheets are constrained, as well as creating a further asset class for direct investments by insurance companies and other institutions.”

Managing partner of Pemberton, Symon Drake-Brockman, added that the independent platform would “appeal to those major insurers and other institutions who wish to offer much-needed funds to mid-market companies in the UK and Europe.”

Legal & General has now made £4 billion of direct investments in UK infrastructure and housing, with ‘slow money’ long-dated investments of up to 50 years, Nigel Wilson (pictured), chief executive of Legal & General Group, also commented.

“Bringing together our financial and investment resources with the specialist skills of Pemberton Asset Management enables us to grow another much-needed asset class. Creating an institutional private placement market for growing mid-caps – as already exists in the US but not here – brings new diversity to corporate funding as well as delivering good risk-adjusted returns for investors,” Wilson added.