TPG platform raises €1.4bn in debut direct lending fund

The London-based mid-market lender can underwrite and hold up to €300 million.

TPG Specialty Lending Europe (TSLE) has closed its first European direct lending platform, collecting €1.4 billion, the firm announced on Monday.

In doing so, TSLE – the European arm of TPG Special Situations Platform (TSSP) – garnered €812 million in equity commitments and €588 million in debt to put to work.

The vehicle will underwrite and hold positions of €30 million to €300 million. TSLE will invest up and down the capital stack in companies with valuations ranging from €50 million to €500 million, but the firm focuses on senior secured loans, according to the firm’s website.

A representatitve from TPG declined to comment.

TSLE’s initial foray into direct lending comes amid strong investor appetite for the strategy. In July, Elian, a fiduciary services provider, surveyed European institutional investors about their preferred strategies and direct lending came out on top, with 55 percent of respondents giving it a favourable outlook over the next 12 to 24 months.

The European direct lending fundraising space has also been active in recent months.

In September, Hermes Investment Management launched a £750 million ($930.57 million; €877.11 million) direct lending partnership with Royal Bank of Scotland. The venture, subject to a green light from regulators, would target companies with EBITDA of between £5 million and £75 million. September also saw Tikehau close a 610 million direct lending fund, which would invest in companies with valuations of between €50 million and €500 million.

Currently, Hayfin Capital Management’s Hayfin Direct Lending Fund II, seeking €2.25 billion, is among the top 10 largest funds in market, according to Private Debt Investor data. Alcentra is also amassing direct lending capital, having blown past its €1.5 billion target with a €2 billion second close in June less than 24 hours after the UK voted to leave the EU.

TSSP is the special situations arm of TPG Capital and manages $19 billion in assets. TPG Specialty Lending, TSLE’s US counterpart, is a publicly traded business development company, which extends credit to mid-market companies through mainly direct senior secured loans. 

Editor's note: The article has been updated to reflect the valuations of companies in which TSLE invests and the firm's response to PDI inquiries about the fund.