UK investment firm Hayfin has penciled in Europe’s largest private credit fund in 2023 with the close of Hayfin Direct Lending Fund IV on more than €6 billion (about $6.5 billion).
As of Aug. 18, 23 private credit funds have closed with a combined value of €29 billion, according to PitchBook data. In comparison, 2022 had a total of 38 private credit fund closes worth €51.3 billion; appetite for the asset class has remained strong in a tough financing market.
Hayfin—founded in 2009—helped finance Providence Equity Partners’ take-private of UK events company Hyve Group earlier this year.
Hayfin CEO and co-founder Tim Flynn said in a statement the “sluggish recovery of the leveraged finance market” made for an attractive environment for lending into the middle market.
Alongside established private debt investors such as Hayfin, Ares Management, Alcentra and HPS Investment Partners, other generalist PE firms are growing their private credit divisions. Among them is The Carlyle Group, which earned more from private credit than its traditional buyout business for the first time last year.
Many portfolio companies in funds raised by buyout firms during the lower-for-longer interest rate environment are in need of additional capital as monetary policy tightens.
In a post on its website, Goldman Sachs Asset Management said many more PE firms with distressed assets are likely to turn to private credit providers for additional capital infusion, noting that the default rate was lower for firms using private credit as opposed to leveraged loans during the COVID-19 pandemic.
Featured image by John M Lund Photography Inc/Shutterstock
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