Hermes Investment Management (Hermes), the €37.2 billion manager, has today announced that it has launched the Hermes European Direct Lending Fund, which is managed by Patrick Marshall, Head of Private Debt & CLOs. The European Fund follows the successful launch of the UK Direct Lending Fund in 2016.
The Fund offers access to the stable, low-correlated returns from high-quality, senior-secured loans to a diverse range of middle-market businesses in the UK and Europe, with a focus on Scandinavia, Germany, Benelux and Ireland.
Senior-secured transactions are originated through co-lending partnerships with Danske Bank, DZ Bank and KBC Bank, which sit alongside the existing UK mid-market agreement in place with Royal Bank of Scotland. As some of the largest mid-market lenders in their respective regions, the agreements provide investors access to a strong deal flow, with attractive opportunities across a wide range of sectors. Further to this, the team’s broad network of contacts among private equity firms, banks and borrowing businesses creates an additional source of origination across Europe.
A diversified portfolio of mid-market loans provides a number of potential benefits to investors. These include the provision of a strong yield and stable returns, coupled with protection against downside risk and inflation hedging characteristics. Lastly, low mark-to-market volatility provides stability to a diversified portfolio.