Muzinich retail vehicle closes on €450m

The pan-European fund manager has raised an European long-term investment fund through which it will blend liquid and illiquid private credit investments.

Muzinich & Co, the pan-European fund manager, has announced the final close of its Muzinich Firstlight Middle Market ELTIF on €450 million including leverage.

The European long-term investment fund, which was launched in March, will build a portfolio that mixes liquid investments (European syndicated loans and high-yield bonds) with illiquid investments in European private debt. The fund was designed by Muzinich and put together in partnership with Cordusio, the wealth management arm of Italian bank UniCredit.

ELTIFs are a new generation of vehicles that allow retail investors to access asset classes that have traditionally been dominated by institutional investors. As with funds set up in accordance with the Undertakings for Collective Investment in Transferable Securities, they are formally regulated and aim to limit risk.

“UCITS funds have a number of restrictions that make them unsuitable for private debt,” said Filomena Cocco, Muzinich’s managing director of business development for Europe. “They need daily liquidity, which means you need to be invested in liquid instruments. They also have a 10 percent cap on syndicated loans.”

Cocco said that although ELTIFs are also regulated and have restrictions, their structure is more conducive to providing private debt investment. However, she added that Muzinich’s latest fund had to be designed differently to the kinds of offerings made to institutional investors.

“While we have been active in private markets since 2014, this is the first time we have been able to create a product through which retail investors may access private debt, combined with a diversified portfolio of syndicated loans – another asset class which historically has only been available to retail investors in limited amounts,” said Cocco.

This month, Muzinich announced the first close of its European Senior Secured Private Debt Fund on €104 million. The vehicle has a target of €500 million and is aiming for a final close during 2020.

Founded in New York in 1988, Muzinich has offices in London, Frankfurt, Madrid, Manchester, Milan, Paris, Dublin, Singapore, Zurich and Geneva. It manages a total of $36 billion in fixed-income credit assets.