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UK investment firm Hayfin has raised more than €6bn for direct lending to European companies — one of the largest private credit funds to close in the region this year.
It is about six times more than the $1bn (€917mn) raised for direct lending by Europe-focused funds in the first quarter, the lowest figure in a decade, according to data provider Preqin.
The fundraising by the London-based firm underlines investor appetite for an asset class that has grown rapidly over the past decade and was dominated by the banks before the financial crisis in 2008-09.
Hayfin expects to raise €7bn by the end of the year for its flagship direct lending fund.
Chief executive and co-founder Tim Flynn said rising interest rates and greater economic uncertainty will lead to more attractive investment opportunities.
“The recent market dislocation and the sluggish recovery of the leveraged finance market presents another attractive environment for Hayfin to deploy capital,” Flynn said in a statement.
Private equity firms are sitting on a record $3.7tn of dry powder, according to Bain & Co — money they will have to invest in the coming months in new deals.
Firms such as Hayfin, Ares, Alcentra and HPS Investment Partners have benefited from a more than decade-long boom in private credit after banks pulled back from lending to private companies after the financial crisis.
Large publicly traded asset managers such as Blackstone, Apollo, Carlyle and KKR, which began life as leveraged buyout firms, have also built sizeable credit arms, in some cases dwarfing their private equity units that made their name.
Much of the growth in direct lending has come from financing deals that buyout firms struck, a market that swelled in size as private equity took advantage of low interest rates to raise larger funds and do bigger deals.
Founded in 2009 in the wake of the global financial crisis, Hayfin manages €30bn across a range of strategies including direct lending and employs more than 200 people in offices in Europe, the US and Asia.
Recent deals the group has been involved in include the financing of the take-private deal of UK events company Hyve Group by US private equity firm Providence Equity Partners.
Rising interest rates are putting pressure on private equity-backed businesses, which use private credit funds such as Hayfin.
A report by law firm Proskauer Rose published this year surveying more than 151 private credit firms found more than three-quarters were predicting an increase in companies defaulting over the next 12 months.
