H.I.G. Bayside Fund: 1 billion for new credit opportunities in Europe!

H.I.G. Bayside Fund: 1 billion for new credit opportunities in Europe!

In a spectacular move, H.I.G. Bayside Capital, the subsidiary of H.I.G. Capital, on December 5, 2024, the closing of the H.I.G. Bayside Loan Opportunity Fund VII announced with an impressive $1 billion in size. This decision not only marks a significant achievement for the alternative investment company with $66 billion in capital under management, but also continues its ongoing strategy of investing specifically in special situations in the European middle market. The fund will invest primarily in secured European loans that are in stressed situations, aiming for high-yield investments that are above the average of comparable credit indices, such as PRNewswire reported.

Perspectives for the market

The current market situation for private loans is proving to be extremely favorable. Loud Pictet The yield on European loans remains attractive at over 12%, especially compared to 7% last year. The variable interest rate of these loans, which adjusts every 30 to 90 days, is advantageous while key interest rates in Europe remain high. In addition, companies that use direct loans are increasingly required to have greater financial discipline, resulting in stronger balance sheets. Many of these companies have a debt-to-equity ratio of around 2-3, compared to 7 previously.

With around €27 billion in loans coming due in Europe over the next three years, the upcoming refinancing offers new lenders the chance to recapitalize financially sound companies on more attractive terms. This could prove to be extremely beneficial as it will lead to increased interest in direct lending, which should further stimulate the private credit market in the coming years.