Park Square and SMBC launch € 3 billion direct loan JV
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LONDON (Reuters) – Park Square Capital and SMBC are setting up a new € 3 billion direct lending fund that will be a joint venture between the two companies, banking sources said Thursday.
Fundraising is expected to end soon on the joint venture, which will provide unitranche loans to mid-sized European companies, the sources said.
The company will bring together two former GE colleagues as it will be led by Howard Sharp, responsible for direct lending in the Park Square mid-market, and Owen Verrier-Jones, responsible for coverage and origination of SMBC sponsors, who have both joined their respective companies from GE Capital in 2015.
Park Square and SMBC declined to comment.
SMBCE bought out GE’s European sponsor fundraising business in 2015 for $ 2.2 billion. GE’s € 1.75 billion European joint venture unitranche fund with Ares, which was established in 2012, was not part of the sale and SMBCE sought to set up a similar fund, bankers said.
Direct lending has been gaining ground since the financial crisis, as borrowers seek other sources of capital to offset declining bank capital, while lenders attempt to improve their balance sheets.
Investors are looking for the attractive returns offered by direct loans in a low yield environment.
Hayfin Capital Management, one of the leading direct lending companies, announced last week that it had raised more than 3.5 billion euros for its European direct lending strategy.
Hayfin has attracted engagements from a wide range of new and existing global institutional investors, including public and private pension funds, sovereign wealth funds, insurance companies and foundations.
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