Epsilon launches second Australian corporate direct lending fund with income focus
Joe Millward
Specialist Australian middle-market corporate direct lending fund manager, Epsilon Direct Lending, has launched its second fund, the Epsilon Direct Lending Senior Loan Fund.
The launch was underpinned by a successful two-year track record from its first fund, the Epsilon Direct lending Fund, that has seen Epsilon raise capital from a range of prominent investors including private wealth advisory firms, multi-family offices, fund-of-funds, high-net-worth investors and small institutional investors.
The new fund seeks to tap the growing demand from investors for Australian conservative private credit strategies that can deliver consistent cash yields, with capital preservation and low volatility, as well as returns which have a low correlation to equity markets, traditional fixed income investments and other private credit strategies such as broadly syndicated loan focused funds.
Epsilon Founding Partner Joe Millward says Epsilon’s new fund will invest alongside Epsilon’s other investment vehicles and is a direct response to the market’s appetite for an Australian private credit strategy that is differentiated and uncorrelated to other available offerings.
“For this fund, investor appetite will be met via its portfolio of directly structured and documented senior secured floating rate loans to high quality, credit-worthy Australian and New Zealand middle-market companies.
“Investors find it attractive that the fund focuses on performing companies operating in non-cyclical industries, to support growth, with no loans made to property-related financing.”
The new Fund has been launched in partnership with a cornerstone investor, a prominent Australian multi-family office.
Mick Wright-Smith, co-Founding Partner at Epsilon adds: “Inflation, high interest rates and a low GDP growth has impacted corporate cashflows, but the middle market remains resilient due to its more conservative borrowing levels and relatively lower exposure to imported inflationary drivers. Middle-market focused private equity dry powder is at high-levels with many sponsors now replenished in recent times. Our investment pipeline is as strong as ever.”
Wright-Smith says that Epsilon has a strong flow of lending opportunities to help finance some of Australia’s highest quality companies and private equity investors as they seek funding for growth and event-driven purposes. The investment team has also expanded to accommodate the funding demand.
Paul Nagy, Epsilon Co-Founding Partner adds: “The rise of private credit globally has been driven from the demand from both investors and borrowers.
“From an investor’s perspective, the opportunity to access a portfolio of well-structured lending opportunities to support the growth of quality companies as a senior secured lender is appealing. For borrowers, it really comes down to having choice and a differentiated service proposition to the traditional bank lenders which provide the vast majority of this capital in Australia.”
