TPG platform raises €1.4bn in debut direct lending fund

The London-based mid-market lender can underwrite and hold up to €300 million.

TPG Specialty Lending Europe (TSLE) has closed its first European direct lending platform, collecting €1.4 billion, the firm announced on Monday.

In doing so, TSLE – the European arm of TPG Special Situations Platform (TSSP) – garnered €812 million in equity commitments and €588 million in debt to put to work.

The vehicle will underwrite and hold positions of €30 million to €300 million. TSLE will invest up and down the capital stack in companies with valuations ranging from €30 million to €300 million, but the firm focuses on senior secured loans, according to the firm’s website.

TSLE’s initial foray into direct lending comes amid strong investor appetite for the strategy. In July, Elian, a fiduciary services provider, surveyed European institutional investors about their preferred strategies and direct lending came out on top, with 55 percent of respondents giving it a favourable outlook over the next 12 to 24 months.

The European direct lending fundraising space has also been active in recent months.

In September, Hermes Investment Management launched a £750 million ($930.57 million; €877.11 million) direct lending partnership with Royal Bank of Scotland. The venture, subject to a green light from regulators, would target companies with EBITDA of between £5 million and £75 million. September also saw Tikehau close a €610 million direct lending fund, which would invest in companies with valuations of between €50 million and €500 million.

Currently, Hayfin Capital Management’s Hayfin Direct Lending Fund II, seeking €2.25 billion, is among the top 10 largest funds in market, according to data from sister publication Private Debt Investor. Alcentra is also amassing direct lending capital, having blown past its €1.5 billion target with a €2 billion second close in June less than 24 hours after the UK voted to leave the EU.

TSSP is the special situations arm of TPG Capital and manages $19 billion in assets. TPG Specialty Lending, TSLE’s US counterpart, is a publicly traded business development company, which extends credit to mid-market companies through mainly direct senior secured loans.