Mid-market corporate debt fund manager Epsilon Direct Lending has launched its second fund, the Epsilon Direct Lending Senior Loan Fund.
The fund has been launched in partnership with a cornerstone investor, a prominent Australian multi-family office.
The manager’s first fund, Epsilon Direct Lending was launched two years ago after raising capital from private wealth advisory firms, multi-family offices, fund-of-funds, high net-worth investors and small institutional investors.
According to Epsilon, the new fund has been structured to respond to growing demand from investors seeking to invest in Australian credit strategies aiming to deliver consistent cash yields while providing capital preservation and low volatility as well as returns that have low correlation to equity markets, conventional fixed income investments and other credit strategies such as broadly syndicated loan-focused funds.
Partner Joe Millward said the new fund would offer senior secured floating rate loans to Australian and New Zealand mid-market companies. He said investors in the fund had been attracted by its focus on providing growth loans to companies operating in non-cyclical industries with no loans to be made to property-related strategies.
Partner Mick Wright-Smith said inflation and high interest rates were impacting on corporate cashflows but the mid-market remained resilient due to more conservate borrowing levels and relatively low exposure to imported inflationary drivers.
Mid-market focused private equity dry powder was at high levels, with many sponsors having raised new funds recently, so the investment pipeline remained strong.
Partner Paul Nagy said the rise of private credit globally had been driven by demand from both investors and borrowers. In Australia, borrowers appreciated having alternatives to the conventional bank source of debt funding, major trading banks, which still provided most business loans.
Image: Epsilon Direct Lending partner Joe Millward.