BlackRock heads for Europe's core mid-market
US asset manager sets sights on Germany with new direct lending fund.
US asset manager BlackRock closed its first European middle-market private debt fund in July this year.
The €1.1 billion fund will, along with several separate accounts, bring total assets under management for this strategy at the firm to €1.8 billion. For an investment firm with €6.3 trillion under management this doesn’t sound like much, but Stéphan Caron, head of European middle-market private debt for the global credit team, is very happy with where the fund is positioned.
“Of the largest European direct lending funds, a dozen are now over €2 billion in size,” he tells Euromoney. “They are moving into the upper mid-market and doing much bigger transactions. Their competition is the capital markets and syndicated loans.”
Indeed, Los Angeles-based direct lender Ares increased its European direct lending strategy commitment to an eye-watering €10 billion within days of the BlackRock fund’s close.
Conditions at the upper end of the market are such that larger direct lenders will increasingly be pitching against large cap cov-lite terms for deals, something that private lenders that stick to the core mid-market are less likely to have to do.
Middle-market borrowers are generally considered by BlackRock to be companies with annual ebitda of less than €50 million, revenues of less than €500 million and debt of less than €500 million.