The £26bn manager has launched Hermes Direct Lending Strategy, which will provide access to stable, low-correlated returns offered by predominately senior-secured loans to small- and medium-sized businesses.
The transactions will be originated through a partnership with RBS with Hermes intending to launch a fund later this year, subject to regulatory approval.
Hermes’ network of contacts among private equity firms, banks and borrowing businesses will also provide a source of origination.
“UK senior loans have generated stable returns in the last eight years, despite the financial crisis, with those extended to mid-market companies offering about 55bps [basis points, ie 0.55%] more yield than larger loans in recent years,” said Patrick Marshall, head of private debt and CLOs (collateralised loan obligations) at Hermes Investment Management.
“The UK has the strongest creditor rights in Europe, which provides greater downside protection for investors.”
Hermes Direct Lending Strategy will initially have a UK focus, but will maintain flexibility to invest across Europe.
Patrick concluded: “Through the Hermes Direct Lending Strategy we aim to consistently outperform for our investors by lending to attractive, growing businesses on terms seeking capital preservation and yield capture.”
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