Super Senior and Senior secured transaction financings for SMEs – often with the involvement of private equity firms
Investment Strategy
The Corporate Direct Lending Debt Funds invest in Super Senior and Senior tranches of transaction- and acquisition financings for medium-sized companies with conservative EBITDA multiples, often in context with the participation of private equity firms. The focus is on cash-flow-strong companies that are characterised by low cyclicality and are market, niche, cost or quality leaders in their segment.
The Corporate Direct Lending Debt Funds have an attractive risk-return profile with significantly higher return opportunities compared to corporate bonds.
The investment strategy has proven its worth even in a challenging market environment and all Berenberg debt funds have been able to maintain their history without any defaults.
Lars Hagemann, Head of Private Credit
Would you like to learn more about our corporate direct lending strategy and investment opportunities? Contact us for a personal consultation.
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LBO market in structural change
The market share of debt funds in the LBO market is constantly growing, while the one of banks has been declining for years. The trend shows that traditional banks are increasingly replaced by debt funds, as banks have reduced their risk appetite in recent years given increasing regulatory burdens and rising multiples.In addition, there are the obvious advantages of debt fund financings, which are particularly visible in their flexibility, for example in terms of multiples, repayment profile, ticket sizes, speed or the "one-stop" solution apart from traditional bank underwriting.In the short to medium term, there is no trend reversal expected, as in addition to the decreasing risk appetite, banks often have slow decision-making and lengthy processes to adapt their business model or strategy.
Key market drivers- "Dry powder" from private equity firms drives up purchase prices and leverages- Investors looking for return in the current low interest rate environment- Generally strong market for mergers & acquisitions (M&A)- Banks withdrawing from LBO market due to regulatory hurdles and low risk appetite- Increasing competition between debt funds
Key market drivers
"Dry powder" from private equity firms drives up purchase prices and leverages
Investors looking for return in the current low interest rate environment
Generally strong market for mergers & acquisitions (M&A)
Banks withdrawing from LBO market due to regulatory hurdles and low risk appetite
Increasing competition between debt funds
Berenberg’s USP
Focus on financing niches by segments, financing ranks and structures
Experienced asset manager with banking licence
Structuring of complex financing solutions
High transaction speed
Broad network and strong industry know-how in various asset classes
In addition to the opportunity for an attractive return, the investment also entails risks which are described in detail in the section "Special Risks" in the issuing document. For example, but not exclusively, the following risks exist:
