As part of this close, a number of new clients have been introduced to the firm and further closes are expected to be held later this year and into 2022.
Federated Hermes’ direct lending strategy aims to provide investors with a stable and secure yield by investing in senior secured corporate debt of small and mid-sized private companies domiciled in Northern Europe. The firm has partnered with four major commercial banks in Europe and the UK, offering unique origination capabilities in this market which, in conjunction with the capabilities of the investment team, provides a significant and high-quality pipeline of potential investments. The investment team conduct market-leading ESG analysis on every loan in the portfolio, assigning each with a proprietary ESG rating, which is monitored quarterly for the life of each loan.
Since launching its maiden fund in 2016, the Direct Lending team has maintained a 0% default rate which can be attributed to their focus on conservatively structured loans, non-cyclical end markets, and high levels of recurring revenue and cash flow conversion.
Harriet Steel, Head of Business Development, at the international business of Federated Hermes, said “The success of this close reflects the shift we have seen from investors wanting to diversify sources of income, having recognised the constraints of traditional fixed income markets and wanting to gain access to private markets. It also reflects the marked acceleration we have seen towards responsible investing, which now encompasses both public and private markets. The Direct Lending team have innovated to deliver a best-in-class ESG overlay for the Fund, which was most certainly a draw for investors. Patrick and his team are regarded as pioneers of integrating ESG into direct lending.”
Patrick Marshall, Head of Private Debt and CLOs, at the international business of Federated Hermes, said “We continue to see value in the creditor-friendly northern European jurisdictions and senior secured lending is the key area of focus in a market that requires discipline in lending practices. Thanks to our unique origination strategy, we have a strong pipeline of opportunities for deployment and continue to be credit-pickers rather than credit-takers in what is a competitive market.”