Barings, one of the largest global private debt investment managers, has raised EUR7 billion for the third vintage of its European Private Loan strategy in an oversubscribed fundraising that underlines the buoyant appetite for private credit among investors and issuers worldwide.
The firm – a subsidiary of Springfield, Massachusetts-based insurer MassMutual – said the capital raise had drawn interest from a globally diversified mix of investors spanning public and private pension funds, insurance companies, sovereign wealth funds, and family offices.
The total investable capital of EUR7 billion raised for the new European loan fund vintage exceeded Barings’ initial target – with support being gathered from both new and existing investors, and with more than two thirds of commitments coming from investors in prior funds managed by the firm.
The successful fundraising comes hot on the heels of the USD9.5 billion that Charlotte, North Carolina-based Barings amassed last year for the second vintage of its North American Private Loan Fund and associated accounts.
In a statement, the firm said its European investment team has deployed EUR6 billion of capital in the last 18 months across more than 80 transactions – resulting in the third vintage being over 50 per cent invested already.
With more than 90 investment professionals focused solely on private finance, and a presence across North America, Europe and Asia Pacific, Barings – which has total assets under management of some USD380 billion – is one of the largest private credit investors in developed markets.
The firm has a long track record in the space, lending to private equity sponsor-backed companies for more than 30 years. As a principal investor for its parent company MassMutual, Barings also invests its own capital alongside its clients in most transactions. Over the last 12 months alone, Barings says it has invested USD14 billion globally in private credit.
“We firmly believe a disciplined approach and strong credit selection can continue to offer investors attractive, through-the-cycle, risk-adjusted returns,” said Ian Fowler, co-head of Barings Global Private Finance Group. “As more investors turn to private credit, scale, relationships and incumbency have become increasingly critical to accessing and evaluating deal flow.”
Fellow co-head Adam Wheeler added: “In these tumultuous times, Barings European Private Debt strategies offer investors exposure to a highly diversified pan-European strategy. Our clear and consistent investment philosophy, disciplined approach, and focus on defensive companies that have a fundamental reason to exist resonated with our clients.”
The significant new capital raise brings Barings’ total committed capital in Europe to EUR12.8 billion, with EUR10 billion invested – underlining the rapidly growing appetite for private debt from institutional investors and also from issuers, especially middle-market buyout companies, for whom private debt is now preferred source of funding over traditional bank loans.
“Since joining Barings over 15 years ago, we have completed over 300 private market loan transactions in Europe,” said Mark Wilton, co-portfolio manager for Barings European Private Finance Group. “We have spent many years creating a leading European private debt platform, serving both our investors and private equity customers. Whilst there have been many notable milestones on the way, this fundraising cycle is a clear highlight.”
With investor appetite for alternative credit booming, fund managers are rushing to capitalise. In its 2002 Global Private Markets Review, McKinsey noted that as at the start of this year there were around 700 new private debt funds being marketed to investors, targeting roughly USD300 billion in capital – both all-time records, according to the consultancy firm.
Figures from alts data group Preqin quoted in the McKinsey review show the total size of the global private debt market had grown to some USD1.2 trillion as of the end of June 2021 – accounting for around 12 per cent of overall private markets industry assets under management, a share level with those for real estate and for infrastructure/real assets.
As a result of the robust growth in both supply and demand, private debt is a priority area for expansion for many large traditional asset management groups. In June Franklin Templeton – which owns US alternative credit specialist Benefit Street Partners – acquired European private debt leader Alcentra in a bid to boost its global presence in the private credit market.
In May Fidelity International recently unveiled a raft of 12 new hires to expand its activities in private credit, notably in direct lending. And this month Italian insurance and investment giant Generali announced the hiring of Sandrine Richard as head of private debt, to spearhead what the group calls its “ambitious development plans” in direct lending.
