AlbaCore has launched a new Senior Direct Lending Strategy – that directly lends to large and upper-mid sized companies in Europe.
The European private credit market is a rapidly growing part of the European debt capital markets.
This first close gives AlbaCore $1.8 billion of investable capital for this strategy.
Anchor investors are the Abu Dhabi Investment Authority (ADIA) and Mitsubishi UFJ Financial Group (MUFG).
AlbaCore is an alternative credit manager with $9.4 billion AUM that invests in private credit, special situations, CLOs, and structured credit.
AlbaCore, ADIA and MUFG’s Rationale
Investors see good risk-return opportunities in the senior direct lending space. Managers are in a race to get scale before the market matures.
Before this type of senior direct lending private credit fund existed, the companies served would borrow from banks – and to a lesser degree from broadly syndicated loans (BSL) and bonds.
As private credit funds have lower costs than banks, they are able to win deals on price and still end up with good risk-return assets. The lower costs come from lower operating costs, and from not having the regulatory capital requirement costs of banks.
As the European senior direct lending market is still relatively new, there is currently a race to gain market share. This market share then gives the winners a competitive advantage in the future – both in capital raising and in deploying assets.
The rationale is borne out in comments on this deal from AlbaCore, ADIA and MUFG:
AlbaCore’s Managing Partner and Chief Investment Officer, David Allen: “Securing commitments from ADIA and the Trust Bank for the first vintage of our Senior Direct Lending Strategy is a testament to the attractiveness of the opportunity set in the market and how well positioned AlbaCore is to take advantage of it.”
ADIA’s Hamad Shahwan AlDhaheri, Executive Director of the Private Equities Department: “This anchor commitment presented the opportunity to grow our existing relationship with AlbaCore, which has established itself as a leading specialist European credit manager. AlbaCore’s Senior Direct Lending strategy is well placed to address the significant and growing demand from European corporates for private credit solutions.”
MUFG’s Chief Executive, Asset Management & Investor Services Business Unit: “We are excited to support the Strategy through this anchor investment. This strategic initiative aligns with that of our global asset management business, which is to expand our private product competitiveness globally in the direct lending space.”
