Tikehau closes fourth direct lending fund on €2.1bn

The latest big fund to hit Europe this year shows established names are able to continue securing commitments.

Tikehau IM has raised €2.1 billion for its latest direct lending fund, more than three times the amount raised for its predecessor vehicle.

Tikehau Direct Lending IV launched in 2017 with a target of €1 billion but had more than doubled that amount. It’s third direct lending fund targeted just €750 million and only raised €610 million back in 2016.

Despite the significantly increased size of the fund, Tikehau said it will take a similar approach to investing this vehicle compared to its previous vintage. It will look to invest in companies with a wide range of EBITDA from €7 million up to €75 million.

Cécile Mayer-Levi, head of Tikehau’s private debt practice, said: “In our previous fund we were often working with co-investors on larger transactions that we will now be able to do ourselves. We also have a number of separately managed accounts that invest alongside our funds.”

The France-based asset manager said its investor base was increasingly international, with 70 percent of investors in the fund coming from outside of France and 30 percent were not based in Europe. Of those investors outside of Europe, most commitments came from Asia.

The fund will continue Tikehau’s strategy of providing financing to SMEs across Europe offering a variety of debt types including stretched senior, unitranche, mezzanine and PIK notes.

So far, more than €700 million of the fund has been invested across almost 20 SMEs in France, Spain, Germany, Denmark, Luxembourg, Norway and the UK. Tikehau anticipates making a total of 35 to 40 investments from the fund.

The fund has a four-year investment period which began in early 2018, though it may invest over a shorter period if sufficient opportunities are identified. It will have a total lifespan of eight years with a maximum two-year extension.

The fund is the second worth more than €1 billion to close this week, with BlueBay announcing it has secured more than €6 billion for its latest vehicle, as investors commit larger amounts of capital to well established fund managers.