Avenue Capital raising new ‘impact’ private credit fund – source

By Carolina Mandl

NEW YORK (Reuters) – New York-based Avenue Capital Group plans early next year to launch a new fund to invest in so-called environmental impact private credit investments, according to a person familiar with the matter.

Avenue – with $12.5 billion under management and best known for its bets in distressed assets – has begun talks with investors to raise between $600 million and $800 million for the fund, the source said, requesting anonymity because fundraising discussions are private.

The fund would finance middle-market companies in sustainability sectors such as food, water, waste and clean energy.

For Avenue, co-founded by billionaire Marc Lasry, this would be the second environmental impact private credit fund. A $500 million vehicle was launched in 2020 with the New York State Common Retirement Fund as one of its main investors.

The new fund will target an annual return around the mid-teens per year, by giving loans with tickets between $20 million and $75 million to companies.

The fund will be run by John Larkin, head of impact investments, and Sean Coleman, a senior portfolio manager, the source said.

Still a tiny fraction of the over $1 trillion private credit world, impact private debt funds have raised 45 billion euros ($49.08 billion), up 219% since 2014, according to investment consultant Phenix Capital. The number of existing funds has also almost tripled since then, to 358 funds.

($1 = 0.9168 euro)

(Reporting by Carolina Mandl in New York; editing by Jonathan Oatis)