Pemberton closes second direct lending fund on €3.2bn

Katharine Hidalgo
23 August 2019

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Pemberton Capital Advisors has closed its Mid-Market Debt Fund II on тЌ3.2bn.

Pemberton European Mid-Market Debt Fund II was launched in January 2018 with a target of €2-2.5bn. The fund had no hard-cap, Pemberton partner and portfolio manager Mark Hickey told Unquote. The vehicle is domiciled in Luxembourg and is targeting an IRR of 8%.

No placement agent was used. Fees, carry and hurdle are understood to be in line with market standards.

The fund held a number of interim closes between launch and final close, to allow previously contributed capital to be deployed, said Hickey.

The fund's predecessor, Pemberton European Mid-Market Debt Fund, closed on €1.2bn in 2016 and is now fully deployed. Equity cheques from the fund are typically in the region of €50m.

Hickey said that the previous fund usually partnered with other lenders on deals; but with the larger amount of capital in this fund, Pemberton will be able to underwrite the entirety of the debt in its deals.

The fundraise follows the close of the firm's European Strategic Credit Fund on €1bn in March 2019. The vehicle is targeting an IRR of 10-12% and is already 50% deployed, according to press reports.

The fund is planning to start fundraising for a second credit fund in Q1 2020.

Investors
The fund has around 45-50 LPs, 80% of which are European.
Pemberton has also taken on more US and Asian investors with this fundraise.

Hickey told Unquote most of the raised capital came from pension funds and insurance companies, with around 40-45% of the commitments contributed by the latter.

Norway-based insurance company DNB Livsforsikring has made a contribution to the fund, according to Unquote Data. Other investors include the London Borough of Lewisham Pension Fund, the Tyne & Wear Pension Fund and the Illinois Teachers' Retirement System.

UK-based insurer and LP Legal & General owns 40% of the direct lender and is a cornerstone investor in the fund, though there were at least two other LPs that made larger contributions, according to Hickey.

Minimum commitments were set at €10m.

Investments
The fund provides senior debt financing to mid-market borrowers in Europe, focusing on companies with a turnover of €75m-1bn. It will write cheques of €50-150m, with 80% of its capital likely to be deployed in sponsor-led deals.

The fund is already 70% deployed across 30 investments. It will aim to make 30-40 investments in total.

People
Pemberton Capital Advisors – Symon Drake-Brockman (managing partner).