HPS Investment Partners, a giant credit manager that manages over $100 billion in assets, has held a final closing of its latest direct lending fund, amid investors' prodigious appetite for private debt investments.
HPS said Monday it wrapped up its Core Senior Lending Fund II with $7.3 billion in equity commitments. The new vehicle has a total of $10 billion in available capital, including leverage, making it the second-largest direct lending fund closed so far this year, according to PitchBook data. It ranks only behind HSBC's roughly $18.7 billion lending vehicle, launched this year to finance small and medium-sized businesses in the UK.
The announcement comes shortly after the closing of HPS' fifth flagship junior credit fund, which raised $12 billion in equity commitments, well above its target.
The fund closes have come amid strong investor appetite for private debt assets, as higher base rates, juicier credit spreads and greater opportunities due to the retreat of bank lending have enticed a mix of investors beyond traditional debt specialists.
In recent months, private equity firms, hedge funds and wealth managers have been building out investment capabilities for private debt. PE giant TPG, Abu Dhabi sovereign investor Mubadala and life insurer Prudential Financial are among the names acquiring private credit managers to expand their reach in the market.
Fundraising for private credit picked up momentum in the first quarter of 2023, with managers raking in $42.5 billion across varied strategies, from direct lending and mezzanine financing to distressed debt, consistent with Q1 2022, according to PitchBook's Q1 2023 Global Private Market Fundraising Report. However, the pace of capital raising from the retail channel has slowed down compared to last year, and certain credit managers have indicated they will shift to institutional investors for fundraising for the remainder of 2023.
HPS Core Senior Lending Fund II, which has deployed about 57% of capital, primarily originates first-lien, senior secured loans to borrowers with an EBITDA ranging from $75 million to about $500 million, according to a person familiar with the fund's strategy. HPS is looking to deploy at least half of the new fund in North America, with the remainder in Europe, Australia and New Zealand, according to a pension document.
Brunel Pension Partnership, one of Britain's largest pension schemes, has committed to the fund.
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Read the orginal article: https://pitchbook.com/news/articles/hps-10-billion-senior-lending-private-credit-fund
