Hermes launches European loan fund

Hermes launches European loan fund

Hermes has launched a European fund which will invest in loans to middle-market businesses.

The Hermes European Direct Lending fund aims to offer stable, low-correlated returns, with a focus on Scandinavia, Germany, Benelux and Ireland.

Patrick Marshall, head of private debt and CLOs at Hermes Investment Management, will manage the fund.

He said: "The strength of our partnerships with Europe’s leading banks, combined with our own origination skills, sustain a strong pipeline of high-quality loans for our investors.

"By focusing the fund on attractive, senior-secured loans in the mid-market space, we can ensure there are strong creditor protections in place. Our aim will be to consistently outperform for our investors by lending to quality, growing businesses on terms seeking capital preservation and yield capture."

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, Hermes said the agreements provide investors access to a strong deal flow, with opportunities across a wide range of sectors.

A diversified portfolio of mid-market loans aims to provide a number of potential benefits to investors, including protection against downside risk and low mark-to-market volatility, which aims to provide stability to a diversified portfolio.

The launch follows the successful launch of its UK Direct Lending fund in 2016.