BlueBay Asset Management Ltd., a money manager owned by Royal Bank of Canada, raised more than 800 million euros ($1 billion) for a fund to lend to small and medium-sized companies.
The BlueBay Direct Lending Fund had a final closing exceeding the original target to raise 500 million euros, according to an e-mailed statement. It will provide 20 million euros to 100 million euros of financing to companies in the U.K. and northern Europe valued at less than 500 million euros.
BlueBay is among a growing array of fixed-income investment managers providing direct lending in Europe as banks cut financing to small companies in order to meet stricter capital rules. Small and medium-sized companies in Europe require an estimated 100 billion euros of debt funding a year, according to a Societe Generale SA research report last month.
“The growth in direct lending funds is providing a real financing alternative to companies and private-equity firms in an environment of continued retrenchment by banks from mid-market lending and we are seeing a large number of exciting investment opportunities,” Anthony Fobel, partner and head of private lending at London-based BlueBay, said in the statement.
Direct-lending funds typically seek to deliver returns higher than investment-grade debt by providing high-yield financing to sub-investment-grade companies.
More than 20 percent of the fund has been invested, BlueBay said in the statement.