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Private debt – Get exposure to the attractive European unitranche lending space

LGT European Capital manages private debt funds that invest in companies on a pan-European basis by arranging and underwriting senior, unitranche and subordinated debt as well as equity co-investments. LGT European Capital manages approximately c. EUR 900 million of assets and its strategies include unitranche and subordinated debt investment opportunities from 5 million to 100 million in either euros or sterling (as of Q3 2017). 

Facts & figures

Total AUM as of 30 Jun 2017: €874 Million (includes undrawn amounts on each fund)

Total invested within same strategy since 2005 until Q3 2017: €2bn in 65 companies

Total Staff: 30 (as of Q3 2017)

LGT European Capitals core investment strategy is to arrange, negotiate and underwrite private debt facilities for European mid-market companies (the majority of which will be private equity sponsored). With a strong emphasis on capital preservation, the team seeks to generate an attractive risk-adjusted rate of return for investors. LGT European Capital focuses primarily on providing unitranche and opportunistically subordinated debt financing. The team may also participate in equity co-investments alongside our unitranche and subordinated debt investments.

The companies targeted will generally have an enterprise value of between EUR 50 million and EUR 500 million, although our preferred enterprise value is between EUR 50 million and EUR 250 million.

Stable, low-volatility investment strategy

Investors benefit from a stable, low-volatility investment strategy, focussed on 1st Lien, secured Unitranche lending at conservative leverage multiples, and which generates a cash yield return which is paid out to investors on a quarterly basis.

LGT European Capital believes that it is differentiated from other firms in the following areas:

  • Consistent investment strategy since inception – focus on the less competitive lower mid-market with a sweet spot enterprise value of EUR 50–250 million
  • Flexible investment approach – ability to complete both unitranche and subordinated debt transactions, enabling LGT EC to be a better partner for private equity sponsors
  • Broad market coverage with established relationships – approximately 65 private equity sponsors and 45 intermediaries 
  • Established and cycle-tested track record – Since inception in 2005 till Q3 2017, LGT EC entities have invested approximately EUR 2 billion in 65 arranged mid-market debt transactions
  • Strong focus on capital preservation – LGT EC has an annual loss rate of 0.2% on total assets since 2005, which demonstrates the downside protection in the portfolio[2].
  • Alignment of interests – LGT Group is a substantial principal investor in the investment programs it offers to third party investors, providing clients a stable platform and strong alignment of interests.
[2] The loss rate is calculated as the amount of invested capital written down in realized/unrealized assets held below cost as a percentage of invested capital
in all realized/unrealized assets, divided by the number of years which LGT European Capital has been investing (11.4 years, from November 2005 to
March 2017). Past performance is not a guarantee, nor an indication of current or future performance

 

Offering

European Capital UK SME Debt: Established in 2014, European Capital UK SME Debt is a £100 million fund focused on providing debt finance in small and medium sized companies in the UK with revenue of up to £100 million.  This fund is closed.  European Capital UK SME Debt will consider investment opportunities in portfolio companies from £5 million to £25 million. 

European Capital Private Debt: Established in 2015, European Capital Private Debt, LP is a fund focused on investing in private debt of middle market companies in Western and Northern Europe with enterprise values between €50 and €500 million.  This fund is closed.  European Capital Private Debt will consider investment opportunities in portfolio companies from €5 million to €100 million. 

European Capital Private Equity I: Established in 2016, European Capital Private Equity 1 is a €100 million secondary fund which acquired in 2016 various investments in seven portfolio companies. The fund is closed. European Capital Private Equity 1 may consider further investments in the portfolio companies that it holds.

Contact us

LGT Capital Partners Ltd.
Phone: +41 55 415 9600

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