Objective: Securing yield through long-term lending partnerships
"The Direct Lending strategy aims to consistently outperform for our investors by lending to attractive, growing businesses on terms seeking capital preservation and yield capture."
The Case for Direct Lending video
Mark Miller, Head of Institutional meets with Patrick Marshall, Head of Private Debt and CLOs to understand what makes the Hermes Direct Lending Strategy different.
Why invest with the Hermes Direct Lending strategy?
- Focused on quality: access to the stable, low-correlated returns offered by senior-secured loans to middle-market businesses in the UK and Europe
- UK focus, regional scope: concentrating on the UK, the largest and most creditor-friendly lending market in Europe, while retaining the flexibility to invest across the continent.
- Strong origination: a joint-venture agreement with RBS’s UK corporate lending arm, plus the team’s own contacts in the loan market, provides a consistent flow of high-quality investment opportunities.
- Experience throughout cycles: the team has an average of 15 years’ experience per member and can successfully structure, execute, monitor and restructure loans.
- Inflation protection: the coupon payments of senior-secured bonds move in sync with interest rates, preserving value in inflationary periods and providing a base return when rates are low.
- Enduring opportunity: banks continue to withdraw from the business-lending market, enabling direct lenders to partner with mid-market businesses – a shift supported by European governments.
The Hermes Direct Lending Cycle:
This document has been prepared using information which is confidential and proprietary to The Royal Bank of Scotland plc (“RBS”, “we”, “us” and “our”). This document and any dispute arising under or in connection therewith is to be governed by and construed in accordance with English law.
This document is being issued to you (the “Recipient” or “you” or “your”) by Hermes Investment Management Limited (“Hermes”) solely in connection with your potential investment in a direct lending fund being established by Hermes (the “Specified Purpose”).
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|LIBOR plus 6% gross annualised|
|Senior loans to UK and European mid-market
− UK exposure: 75%-100%
− European exposure: 0%-25%
|Senior-secured loans: 75%-100% of portfolio
Unitranche loans: 0%-25% of portfolio
|No strategy leverage
Leverage below 5.5x for senior loans
|GBP, with hedging on loans denominated in other currencies|