LONDON Feb 28 Rothschild Debt Fund Management
has raised two thirds of an up to 300 million euro ($393
million) loan fund designed to help replace a looming shortfall
in lending to lower-rated companies in Europe, banking sources
said on Thursday.
The credit unit of the 200-year-old financial advisory group
is launching the fund to invest in high-yielding European
leveraged loans to companies with an enterprise value of more
than 500 million euros, the sources said.
Around 25 billion euros of leveraged loans - which are
credits to private equity-owned or other sub investment
grade-rated companies - will disappear this year as
collateralised loan obligation (CLO) funds reach the end of
their reinvestment period, according to Thomson Reuters LPC
CLO funds were the main provider of credit for leveraged
buyouts during the private equity boom of 2005 through 2007, but
since the start of the financial crisis fund managers have been
unable to raise new CLOs in Europe.
Last week, Cairn Capital was the first manager to sell a new
European CLO since the collapse of Lehman Brothers, while many
other managers have in the last two years kick-started efforts
to raise alternative vehicles such as listed loan funds, managed
accounts or combined loan-bond funds.
Rothschild already has 2 billion euros of leveraged loans
under management, including five CLO funds.
Its new fund will invest in European senior secured loans
and Rothschild is targeting to raise no more than 300 million
euros, the sources added.
The main investors in new loan funds in Europe are insurance
companies and pension funds, seeking high returns as leverage
loans yield around 5 percent.