17Capital closes debut Credit Fund on EUR 2.6bn

Harriet Matthews
20 April 2022

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17Capital has held a final close for 17Capital Credit Fund on its EUR 2.6bn hard-cap; the vehicle is the firmтs first fund dedicated solely to NAV lending in the form of credit.

The vehicle exceeded its EUR 1.5bn target, according to a statement from 17Capital.

Proskauer provided legal advice on the fund.

The vehicle held a first close in summer 2020 with the support of existing LPs and made its first investment in Q2 2022, co-founder and managing partner Augustin Duhamel told Unquote.

17Capital Fund 5, the GP's latest flagship fund, held a final close in June 2021 on USD 2.9bn. The vehicle makes deals in the form of both credit and preferred equity.

Although the GP has provided NAV loans since its inception in 2008, beginning by offering these in the form of preferred equity, its latest vehicle is the first to provide this financing solely in the form of credit, Duhamel said. The GP aims to be able to better serve its clients with the new fund, he added.

Duhamel told Unquote that demand for the strategy came in part from the managers the GP works with, many of whom were willing to take financing in the form of credit as opposed to preferred equity. The GP also saw demand from LPs seeking exposure to differentiated strategies and direct lending in the form of NAV-based credit, Duhamel said.

17Capital intends to bolster its team as dealflow for the fund increases, Duhamel said, with a particular focus on its New York office to expand its capabilities in North America.

According to the statement, the GP is set to deploy USD 3bn in H1 2022, doubling its pace of investment from 2021.

17Capital intends to donate a percentage of the carried interest generated from the fund to Epic, a charity that it hosts in its offices in London and that aims to improve the lives of disadvantaged young people.

London-headquartered 17Capital provides non-dilutive financing for LPs and GP management companies, as well as portfolio financing. Its loans see the GP gain exposure to a diversified portfolio of underlying assets.

The firm announced a strategic partnership with Oaktree Capital Management in March 2022 that saw Oaktree acquire a majority stake in 17Capital, as reported.

Click here to read a GP Profile of 17Capital on unquote.com.

Investors
The fund's LP base comprises global institutional investors. Duhamel told Unquote that the majority of the fund's LPs are North American, with the largest portion coming from insurance companies and public and corporate pension funds. The vehicle is also backed by sovereign wealth funds and family offices.

New investors contributed 30% of the fund's commitments, with 70% coming from existing investors, Duhamel said.

Investments
17Capital Credit Fund will provide loans to high-performing private equity managers in Europe and North America. It expects to make 12-15 deals in total, providing loans in the EUR 50m- EUR 1bn range.

The fund has deployed more than EUR 1bn to date across seven loans, with a further EUR 800m syndicated to co-investors, according to the statement.

"The fund is around half invested already and the pipeline is very strong," Duhamel told Unquote. "We are starting to see more inbound demand as well, the NAV lending market is becoming more visible and we are visible there, so we are seeing even more dealflow. We are expecting 2022 to be even stronger than 2021."

People
17Capital – Augustin Duhamel, Pierre-Antoine de Selancy (co-founders, managing partners).