Neuberger Berman has raised a total of $1.1 billion for its NB Private Equity Credit Opportunities Fund, the company said on Tuesday.
The vehicle will issue secured and unsecured debt to private equity-backed companies, while also purchasing such loans on the secondary market.
The fund is targeting a net internal rate of return of 15-20 percent, a source familiar with the matter told Private Debt Investor, and has already invested $175 million to date, with a focus on North America and some investments in Europe.
The strategy will capitalise on “inefficiencies in North American corporate credit with a long-term vehicle that can provide liquidity throughout various market cycles”, David Lyon, managing director and head of the fund, said in a statement.
Lyon told PDI that the firm sees inefficiencies particularly in the secondary loan markets, where one of the most active players, collateralised loan obligations, are quick to pull back from the space when specific companies start having problems or the market becomes dislocated in general.
The fund launched in 2016, according to a filing with the US Securities and Exchange Commission.
The New York-based asset manager closed its NB Private Debt Fund II on a total of $750 million, targeting junior debt in October of last year. That fund targeted unitranche, second lien or mezzanine loans in deals with a private equity sponsor in companies with EBITDA of $25 million to $250 million.
The total raised for Fund II surpassed its predecessor, which raised $620.9 million, surpassing its $500 million target, according to PDI data.
The fund close brings Neuberger Berman’s total committed capital focused on credit to private equity-backed companies to $3.1 billion, in both the primary issuance and secondary purchases, the statement showed.
That total compares to the firm’s $271 billion in total assets under management, including $61 billion in alternatives, including private equity, credit and hedge funds, as of 30 June, according to its website.