Middle Market Lending Europe

Middle Market Lending - Drohne

Middle Market Lending Europe

Middle market (direct) lending is also referred to as "corporate private debt". The objective is the granting of loans by a very small group of lenders to medium-sized enterprises, e.g. for growth or acquisitions.

200
Billion euro
Approximate size of the European market for private debt
> 2,5
Trillion euro
Decline in domestic bank financing
10-100
Million euro
Comprises the EBITDA of the most important medium-sized enterprises

What sets our manager apart?

  • Independent private debt specialist with local presence at eight locations
  • Has the necessary size for bilateral loans
  • ESG is integrated in every step of the investment process and is part of the borrower rating
  • Proven capital investment of more than EUR 14 billion, invested in more than 100 companies
  • 140 specialists (Pemberton Group) and a leadership team with an average of more than 20 years of experience
  • Dual-track investment process with two independent teams for credit acquisition and credit analysis
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Diversification

  • Pan-European model allows for broad diversification
  • Cap on UK exposure of 35 percent
  • Focus on defensive sectors with a cap of 25 percent
  • Limitation of borrowers who have the same private equity sponsor to 10 percent
  • Average allocation per borrower of 3 to 4 percent
 

Reduction of credit risk

  • Priority and risk limits ensure compliance with the investment philosophy
  • Only senior secured loans
  • Exclusion of cov-lite loans 
  • Additional restrictions with regard to the credit quality and debt ratio
 

Attractive conditions

  • Pemberton provides for selectivity and negotiating power
  • Focus on companies with EBITDA of EUR 10 to 100 million
  • Focus on bilateral loans
  • Credit structuring fees are fully passed on for the benefit of the investors
 

Institutional approach and service

  • Focus on institutional customers
  • Experts on site in Europe's most important legal areas
  • Dual-track investment process with independent loan team
  • Detailed risk assessment and a progressive IRB model
  • ESG aspects are taken into consideration in every process step and are subsequently regularly monitored
 

Only senior secured loans

The focus on senior secured bilateral loans ensures priority with regard to the capital structure, control and negotiating power vis-à-vis borrowers.

Expert partner

Pemberton has a very experienced team with a local presence in Europe's most important markets and is thus a premier partner in the field of direct lending.

Cost-effective and tax-efficient structure

Lux RAIF structure (Reserved Alternative Investment Fund) offers regulatory security, tax efficiency and low costs. What is more, the portfolio guidelines have been custom-tailored for institutional customers in Switzerland.

The target portfolio in a nutshell

  • Focus on bilateral loans in the core middle market in Europe
  • Senior secured corporate loans with variable interest rates
  • Appropriate diversification across countries, industries, private equity sponsors and borrowers
  • Focus on loans to companies with low capital commitments and high capital efficiency in defensive sectors
  • Proprietary exclusion list for borrowers, controversial sectors and climate 

Key facts and Performance

Would you like to know more about the performance of Middle Market Lendig Europe I or II?

 Name  Zurich Invest Middle Market Lending Europe II (EUR hedged)
 Legal structure  Lux RAIF (Zurich Privat Debt Europe LUX RAIF)
 Investor group  Institutional investors domiciled in Switzerland
 Currency  Euro (EUR) (non-euro investments are hedged against the Euro)
 Administrator  Bank of New York Mellon (BNY)
 Loan administrator  Erste Financial Services GmbH (EFS)
 Auditor  PricewaterhouseCoopers (PwC)
 Target size   Approx. EUR 300-500 million
 First close  July, 8th 2022
 Final close  July, 7th 2023
 Investment periode  3 years (capital calls in EUR: D+5 banking days)
 Minimum commitment  EUR 5 million
 Duration  8 years, closed structure (option to renew by 2 x 1 year)
 Management fee  1.0% (on the invested capital)  
 Performance fee  10.0% (at a hurdle rate of 5.0%) 
 Expected total expense rate  Approx. 1.8% (depending on the performance fee)

Paths to illiquidity

A healthy mix of liquid and illiquid investments offers institutional investors returns and the necessary security.
Infrastructure

Successful infrastructure investments via co-investments

Diversify broadly with co-investments, and generate steady returns with brownfield investments. Thanks to good advice, you can also benefit from attractive fees.

Our advisory service

Would you like further information? We would be glad to advise you.
Markus Binder, lic. iur
Head of Institutional Customers
Hans Baumann
Customer Advisor Institutional Customers
Oana Ardelean
Customer Advisor Institutional Customers
Marcel Wüthrich
Customer Advisor Institutional Customers
Thomas Sonderegger
Customer Advisor Institutional Customers
Peter Bezak, MSc MAS
Economist and Investment Expert

Address

  • Zurich Invest Ltd
    P.O. Box
    8085 Zurich