Capital Dynamics raising first direct lending vehicle

The Swiss firm is targeting senior secured loans, but it will also make investments further down the capital stack such as mezzanine debt and of an opportunistic nature, such as rescue financings.

Capital Dynamics is seeking $500 million for its debut credit fund, which will focus on transactions involving a private equity sponsor, according to a source familiar with the matter.

The Zug, Switzerland-based asset manager’s private credit strategy, which the firm publicly announced Tuesday, will target US lower mid-market companies, or those with more than $7.5 million of EBITDA and an enterprise value of more than $50 million, according to the firm’s website. Institutional Investor first reported news of the fund.

It will finance leveraged buyouts; acquisitions; growth capital; refinancings and recapitalisations; and bridge, rescue and bankruptcy loans. Capital Dynamic’s primary focus will be senior secured loans, both first and second lien as well as unitranche. The firm will opportunistically invest in mezzanine debt; preferred equity and equity co-investments; unsecured notes and bonds; and broadly syndicated loans.

Jens Ernberg and Tom Hall, former co-chief investment officers at Credit Suisse Park View BDC, joined the private equity firm as co-heads of its Private Credit Asset Management division and are based in New York. Cion Investments, which runs a BDC sub-advised by Apollo Global Management, bought Credit Suisse’s mid-market lending group in September 2016 for $276.9 million.

“We will look to selectively build a strong underwriting team of investment and risk management professionals to facilitate and support growth,” the men said in an email.

After the sale of their former company, Ernberg and Hall chose not to seek employment from Cion, and instead began looking for a home to start a new direct lending business, sources exclusively told sister publication Private Debt Investor. Among the potential partners was a private equity firm looking to start a credit arm.

Alongside private credit, Capital Dynamics, which manages over $27 billion in assets, offers funds of funds, direct co-investment, secondaries and clean energy infrastructure platforms.