Avenue Capital set to launch new impact credit fund

Avenue Capital is planning to launch a new fund early next year which will target private credit investments which have an environmental impact.

According to reporting from Reuters, the $12.5bn (£9.97bn) investment manager is already in talks with investors to raise between $600m and $800m for the fund, ahead of a launch in early 2023.

The fund would provide financing to mid-sized companies in sustainability sectors such as food, water, waste and clean energy, a source said. Typical loan values are expected to be between $20m and $75m.

It will be run by John Larkin, head of impact investments, and Sean Coleman, a senior portfolio manager. The new fund will target an annual return around the mid-teens per year.

Read more: HeavyFinance underlines importance of transparent data in impact investing

This would be the second environmental impact private credit fund for Avenue Capital. In 2020, the company launched a $500m private debt impact investment fund, with the New York State Common Retirement Fund as one of its main investors.

Impact funds have been gaining popularity in the private credit space of late. Earlier this week, BlueOrchard, an impact investment manager which is part of the Schroders Group, launched an impact credit fund dedicated to improving financial inclusion worldwide.

Read more: Blackstone raising $400m to boost private credit fund