Duke Street Capital Debt Management (DSCDM) has successfully closed its third fund at €450m. Duke Street Capital sold Duke Street Capital Debt Management to David L Babson earlier this year. The fund is the first raised under the new ownership of Babson Capital Management. The new fund is smaller than its predecessors Duchess II, which closed on €550m in 2003 and Duchess I which held a first close at €750 million in June 2001 and was increased via a tap issue and at €1 billion is the largest cash flow arbitrage CDO in Europe focusing on LBO debt. With Duchess III, DSCDM now has total funds under management of €2bn. Duchess III is already over 65% invested and has access to a wider investment pool than many European CDOs as it is investing in both sterling and euro denominated assets.
The fund is focusing on senior secured and mezzanine loans within the leveraged finance markets. Assets are diversified by industry, geography and asset type with a target mix of 80% senior secured and 20% mezzanine loans.
CDC IXIS structured and arranged Duchess III and has been working alongside the Duke Street Capital Debt Management team in the placement of the notes.
Ian Hazelton, chief executive of DSCDM, said: “The European leveraged loan market remains robust with low default characteristics and attractive pricing. The current high levels of liquidity in the private equity sector underpin continued growth in the supply of loans and we look forward to further participation for the benefit of investors in all of our funds.”