Rothschild & Co closes third direct lending fund at €1.4bn

The fund is more than twice the size of its predecessor and will back both sponsored and unsponsored mid-market companies.

Rothschild & Co has held a final close of its third European direct lending fund at €1.4 billion.

The vehicle, Five Arrows Debt Partners III, is significantly larger than its predecessor, which raised €655 million in 2018.

LPs include a globally diverse group of insurance companies, pension funds and other institutional investors as well as a family office and high-net-worth individuals and included a significant proportion of returning investors.

FADP III will provide finance solutions for European mid-market companies across the capital structure. Its loans will range from senior-secured unitranche to junior instruments including mezzanine and PIK facilities and preferred equity structures.

It will invest in both private equity sponsored companies and provide debt to family and entrepreneur-owned businesses. Capital will be used for acquisitions, organic growth, refinancing and shareholder reorganisation.

Like its predecessors, FADP III will be managed by co-managing partners Martin Hook and Edouard Veber and their team, which is split across London, Paris and Luxembourg.

The fund is already more than 40 percent invested after completing 11 transactions within core sectors such as healthcare, education, software, data, business services and financial services.

In a statement following the close, Hook and Veber said the fund will also focus on promoting sustainability through a developed and proactive approach to ESG investing.