Hermes Investment Management has launched a European direct lending fund saying it will help investors wanting yield and stable returns.
The Hermes European Direct Lending Fund is managed by Patrick Marshall, head of private debt and collateralised loan obligations, and complements an earlier direct lending fund launched in 2016 that is focused on UK companies.
The latest fund will search for returns among senior-secured loans to middle-market businesses in the UK and Europe, with a focus on Scandinavia, Germany, Benelux and Ireland.
Senior-secured transactions are originated through co-lending partnerships with Danske Bank, DZ Bank and KBC Bank, together with the existing UK mid-market agreement in place with Royal Bank of Scotland.
Hermes said a diversified portfolio of mid-market loans provided strong yield and stable returns, protection against downside risk and inflation hedging characteristics, while low mark-to-market volatility provided portfolio stability.
Marshall said the aim would be to outperform by lending to quality, growing businesses on terms seeking capital preservation and yield capture.
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