Pemberton Asset Management’s inaugural European Mid-Market Debt Fund, which brings together investors from large blue-chip financial services and insurance companies across Europe, has held its first close at EUR447 million.
Legal & General Capital (LGC) purchased a 40 per cent stake in Pemberton Asset Management in July 2014, with an initial commitment to invest EUR250m into mid-market loans in order to develop a European lending capability, accelerating its participation in the direct lending market and providing a new source of institutional funding to corporates over the long term.
The Pemberton European Mid-Market Debt Fund I provides much-needed finance to established mid-market European companies, and in return offers L&G shareholders and other institutional investors a strong stream of quarterly income and attractive total returns.
Focusing on companies with a turnover between EUR75 million and EUR1 billion, Pemberton is targeting a bigger and more attractive part of the market, which it believes offers better pricing and risk-adjusted returns for investors compared to larger LBO syndicated leveraged loans. The Fund is looking to build a diversified portfolio of bilateral, club and smaller syndicated senior and senior secured loans
Leveraging the Pemberton team’s proven track record in credit underwriting and risk management, the Fund will focus on the three largest European economies of Germany, the UK and France, which account for more than half of EU-28 GDP, together with selected other countries in Europe, including non-EU members Norway and Switzerland. The origination teams are locally-based, currently with offices in the UK, Germany, France, Holland, Spain and Italy, but with plans to be strategically located in other key countries in Europe, facilitating closer relationships with counterparties and other market participants, resulting in better market intelligence and investment sourcing capability.
Paul Stanworth (pictured), Managing Director of Legal & General Capital, said: “Mid-market corporate loans are attractive investments because compared to many other asset classes, including traditional fixed income products, they offer higher yields, combined with stable performance and strong downside protection. In Pemberton we have a strong strategic partner, with the long standing relationships necessary to access attractive deal flow, extensive knowledge of working in all major European markets, and the expertise in credit underwriting and risk management.”
Keith Jones, Chairman of Pemberton, commented: “With the balance sheet constraints faced by European banks, mid-market corporates are struggling to gain the funding they need to deliver business growth. Pemberton, with the backing of L&G, has built an on-the-ground presence in six European countries, which is providing us with a strong pipeline of lending opportunities. The backing of L&G and other institutions will allow Pemberton to continue to make investments in companies with high growth potential.”