Mubadala Picks Barings for Second Direct Lending Partnership

(Bloomberg) -- Mubadala Investment Company is partnering with Barings for a new $3.5 billion European direct lending platform, the second large-scale direct lending tie-up for the Abu Dhabi sovereign wealth fund.

The joint venture, to be known as Barings Mubadala Enterprise, will make first ranked loans to mid-sized European companies to back acquisitions and growth, according to a joint statement. Mubadala will be the “anchor” partner with both Barings and its insurer parent, Massachusetts Mutual Life Insurance Co. also putting up capital for the platform.

Mubadala announced a $12 billion lending partnership with Apollo Global Management in July that will make loans of up to $1 billion to companies in the U.S. and Europe. A wave of big investors have formed private credit partnerships this year with Credit Suisse announcing its tie-up with Qatar Investment Authority just last week.

Read more: Apollo to Shake Up Private Credit With $12 Billion Lending Plan

Investors have been pouring into the fast-growing private credit asset class for several years running. Direct lending, the largest sub-sector of the space, seeks to match yield-hungry investors with businesses seeking loans in the wake of banks’ broad-based retreat from riskier lending as post-financial crisis regulations bite.

The new venture is “evergreen”, meaning the capital will be recycled into new loans as older facilities are repaid. Barings has a well-established European direct lending team, the second biggest by number of deals in Europe over the last twelve months, according to data compiled by GCA Altium in its second quarter Mid-Cap Monitor.

©2020 Bloomberg L.P.