Rothschild closes €1.4bn European direct lending fund amid surge in new fundraising capital


Rothschild & Co. has held a €1.4bn final closing for its third European direct lending fund. The raise means the firm has hauled in more than €2bn of new capital in four months, including closing two private equity funds in June.

Five Arrows Debt Partners III, which is significantly larger than its €655m predecessor fund, boosts the firm’s assets under management to €17bn. It is already 40% invested in 11 transactions in healthcare, education, software, data and business and financial services.

Rothschild said FADP III would provide customized financing solutions to European mid-market companies across the debt capital structure, ranging from senior-secured unitranche loans to junior instruments such as second lien, mezzanine and PIK facilities.

It will also support private equity sponsors in buyout, expansion and recapitalisation transactions as well as direct lending solutions to family and entrepreneur-owned businesses.

Co-managing partners Martin Hook and Edouard Veber said in a joint statement, “We believe that the combination of our highly experienced team, proven track record and distinctive, focused investment strategy, together with the added-value contribution of the Rothschild & Co network, has made FADP III an appealing proposition to an enlarged and diverse group of sophisticated international investors.

“In common with each of the other funds in our Merchant Banking business, and in line with the strategic focus of the broader Rothschild & Co group, FADP III will continue to work hard to promote sustainability through its well-developed and proactive ESG approach.”

Rothschild closed Five Arrows Growth Capital fund on €450m in June to invest in European fast-growing small-cap companies, in specifically targeted sub-sectors within healthcare and education, data and software, and technology-enabled business services.

Its private equity investment arm Five Arrows hit a €366m final close for its second multi-strategy fundraise in the same month, well above its €250m target.

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