Pemberton hits €547m in first close

The mid-market lender, backed by UK insurer Legal & General, is expected to roll out more funds over the coming year.

Pemberton has held a first close of €547 million for its flagship private debt fund, the European Mid-Market Debt Fund, the firm announced.

Commitments to the fund came from a variety of institutional investors including a €100 million segregated mandate from Legal & General. The UK insurance company is a 40 percent shareholder in Pemberton, after putting €250 million into the firm’s mid-market lending strategy, and has made a third investment into the pooled fund alongside other limited partners.

The fund attracted seven insurance companies and pension fund investors from across Europe including an Italian insurer as well as two French insurers, Symon Drake-Brockman (pictured), managing partner of Pemberton, told PDI. A family office has also committed, he added.

The firm plans on rolling out two other funds over the next six months with one targeting higher rated credit and the other more second lien or mezzanine opportunities.

Citigroup Capital Markets is placement agent for the firm's debut fund while Arbour Partners is assisting Pemberton in its work with investment consultants and specialist credit investors.

Pemberton started fundraising in January 2015. The London-headquartered firm has a pipeline of more limited partners to take it to another close of around €1 billion in the fourth quarter of this year, Drake-Brockman said. It will likely limit the strategy to €1.5 billion, he added.

The investment strategy is senior and senior secured lending but a bucket in the fund has been set aside for unitranche at around 20 percent, based on the opportunity as it arises. The firm will target club and bilateral deals and the syndicated market to a lesser degree. Overall, it is expected to yield around 7 percent.

So far, Pemberton has completed three deals from the L&G segregated account – a seven-year senior term loan for the public to private takeout of Daisy Group, a technology services provider; a seven-year senior term loan supporting the acquisition by Onex of the Survitec Group; and a loan to Faist, a German engineering company, on which Pemberton teamed up with a leading German bank. The lender extended a seven-year tranche, alongside a medium-term amortising structure and a shorter-term working capital facility.

Pemberton intends to focus on the German, UK and French markets, according to a statement, with Drake-Brockman adding that it will be opening an office in France shortly. The firm also has originators in Spain, Italy, Germany, the Netherlands and the UK.

There is a strong deal pipeline for the fund, said Drake-Brockman, who anticipates that a significant amount of the capital raised will be deployed by September.

“Pemberton supports quality companies on their growth journey, providing access to patient capital over the long term. In the current low yield environment, real money investors such as insurance companies, pension funds and family offices, are a natural provider of long-term capital into this space, via alternative lending platforms capable of providing access to traditional mid-market financings with thoughtful and transparent credit risk management,” Drake-Brockman said in a statement.

Paul Stanworth, managing director of Legal & General Capital, said in a separate statement: “Mid-market corporate loans are attractive investments because compared to many other asset classes, including traditional fixed income products, they offer higher yields, combined with stable performance and strong downside protection.”