Fund manager launches new €100m direct lending fund

By Daniel Lanyon on 2nd July 2019

Alternative Credit

Certior Capital says the portfolio has the backing of international investors.

Fund manager launches new €100m direct lending fund
Image source: Photo by rawpixel.com from Pexels

Certior Capital has closed its latest private credit fund, €100m Certior Credit Opportunities Fund II, aimed at the direct lending space.

The new vehicle aims to achieve returns of 8-10 per cent net to investors through a diversified pan-European portfolio of 100+ senior secured or asset-backed loans. It will focus predominantly on the European SME direct lending segment. 

It has, the firm says, received strong backing from Finnish pension funds and family offices, including a significant number of new investors, and have also raised money from outside Finland for the first time.

It is expected that around half of the fund will be deployed in primary investments with the rest allocated to co-investments and secondary transactions.

Ari Jauho, the Chairman of Certior Capital says the fund is focusing on what he sees as an undercapitalised and overlooked segment of the market, with too much money chasing larger ticket loans.

“Five managers alone have raised over EUR 25bn for larger, sponsored direct lending opportunities in Europe in recent months. As money has poured into this segment we clearly see it becoming less interesting as an investment opportunity. 

“In stark contrast, SME direct lending funds focusing on €5-25m senior loans have received very little capital. As a result, these smaller loans to well- established companies having perhaps € 1-5m of EBITDA and €20-50m of sales look very attractive from a risk-adjusted basis. 

“These loans can still offer investors a high cash yield, attractive all-in pricing with upside potential, conservative capital structures and lender friendly terms with full covenants”. 

“It is clear that more and more institutions are looking at the smaller unsponsored lending opportunity across Europe and seeing the value it offers in the current market”.

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