Sienna IM announces €270m first close of defence-focused private credit strategy

Sienna Investment Managers (Sienna IM) has secured more than €270m (£234.3m) in commitments at first close of its private credit strategy focused on European defence-related SMEs and mid-caps.

The recently-launched strategy comprises an institutional fund, Sienna Hephaistos, and a closed-end fund designed for retail investors to be distributed in partnership with insurance companies and savings vehicles.

The pan-European asset manager confirmed a target fundraising for the strategy of between €500m and €1bn by the end of 2026.

Sienna Hephaistos will finance between 30 to 40 small- and mid-cap companies operating in the European defence sector.

Inflows into the fund will be deployed in Europe by its French private credit management team, which will draw on the expertise of the Sienna IM group’s Italian management team.

Read more: Sienna IM appoints corporate private credit head for France and Italy

Sienna IM said the senior secured debt fund aims to support the subcontracting chain of major groups in the defence industry via loans financing both their working capital and capital expenditure, “as well as external growth operations, in addition to capital financing and bridging existing bank financing”.

It called the loans “critical” for their beneficiaries at both the early stage and for the execution of public orders, which are expected to grow “strongly” in the coming years.

The asset manager cited a “surge” in orders and increased financing needs among subcontractors to major defence industrial groups, against “a backdrop of geopolitical upheaval that is altering the global balance of power”. 

“We would like to thank the investors who place their trust in us by embracing our innovative and meaningful strategy, which is already being rolled out ahead of an extensive offering to retail investors,” said Laurent Dubois, managing director and chief investment officer, private credit at Sienna IM.

“Historically committed to the financing of mid-market companies, we are convinced that the mobilisation of all financial players, banks, alternative lenders, equity investors, is crucial for the European defence industry. This is key for sovereignty, development and reindustrialisation of our regions,” added Dubois.

Read more: Sienna IM saw private credit inflows hit €400m last year