Federated Hermes announces first close of third European direct lending fund
Federated Hermes has launched the third vintage of its European direct lending fund (EDL III), with commitments of 50 per cent of the total fund target size.
Further closes are expected to be held in 2025, as fundraising continues from both new and existing investors.
The fund lends to high-quality, non-cyclical small and mid-sized businesses based in Northern Europe. It aims to “generate attractive risk-adjusted returns through capital preservation and stable income above levels provided by comparable fixed income assets,” said Patrick Marshall (pictured), head of private credit, Federated Hermes.
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“Our clients have historically benefited from our highly risk-managed approach, which incorporates ESG and focuses on lending to high-quality businesses in non-cyclical sectors,” added Marshall.
“Our distinct origination capabilities working in partnership with some of Europe’s leading banks, generates robust deal flow, allow us to access high quality credit opportunities and enable us to be credit-pickers rather than credit-takers in an increasingly competitive market.”
The fund takes into account ESG factors when making lending decisions, with ESG analysis conducted on every loan in the portfolio.
Read more: Federated Hermes: Private credit default risk remains
Since the launch of Federated Hermes’ first European direct lending fund in 2016, the team has maintained a zero-default rate. The firm said that this can be attributed to a focus on conservatively structured loans, non-cyclical end markets, and high levels of recurring revenue and cash flow conversion.
“We are extremely pleased by the strong investor support we have seen for EDL III to date,” said Jakob Nilsson, head of private markets sales ex North America, Federated Hermes.
“It has been especially pleasing to see existing clients commit to EDL III in larger sizes than previous vintages, a real testament to the track record of our experienced private credit investment team.
“We would like to thank our existing and new investors for their trust and look forward to working with them to achieve their investment objectives.”
Federated Hermes was named lower mid-market lender of the year at the Alternative Credit Awards earlier this month.
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