Alcentra revives direct lending push with multi-billion fundraising drive

Under the new ownership of Franklin Templeton-owned Benefit Street Partners, Alcentra is seeking to raise several billion euros for its main strategies, including its Luxembourg-registered European Direct Lending Fund IV, according to the first two sources.

Alcentra’s attempt to raise fresh capital for its private credit strategy comes around 18 months after the alternative asset manager suffered an exodus of senior staff in November 2021. At the time, sources close to Alcentra cited its struggle to raise funds for its European direct lending operation as a key driver behind the departures, as previously reported by Unquote sister publication Debtwire.

Just a few months later, in early 2022, Alcentra’s previous owner BNY Mellon put the company up for sale, which culminated in a takeover by US-based Benefit Street Partners in June that year.

In addition to its main direct lending fund, Alcentra is also raising capital for separately-managed accounts (SMAs), the first source noted. SMAs are essentially side-cars that sit alongside flagship funds that enable large limited partners to invest often on more favourable terms, with enhanced selectivity over deals, a sixth source familiar explained.

Alcentra’s most recent successful private credit fundraise saw the debt manager secure EUR 5.5bn – surpassing its target of EUR 3bn – for its third direct lending vehicle, which held a final close in July 2019. In January 2021, Alcentra registered its European Direct Lending Fund IV, which has yet to hold a final close.

In recent years, Alcentra has encountered numerous problems within its private credit portfolio. In 2022, it took the keys to three companies, as reported in December by Debtwire.

Between January and November of 2022, when Franklin Templeton formally closed its acquisition of Alcentra, the latter saw its assets under management fall from more than USD 42bn to USD 35bn – a 17% decrease in the space of just 10 months.

Alcentra’s owner, Franklin Templeton, declined to comment.

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