Overview
The challenge
Halcyon's fifth Direct Lending fund was raised against a fundraising environment that had become markedly more selective, with institutional investors concentrating commitments among a smaller number of managers with established track records. The fund needed to accommodate a diverse international investor base spanning pension funds, sovereign wealth funds and insurance companies, each with distinct regulatory, tax and reporting requirements, while preserving the commercial terms that had made Halcyon's prior funds successful.
A particular complexity arose from the number of parallel and feeder structures required to make the fund accessible to investors across multiple jurisdictions, each of which needed to be structured without disturbing the economic alignment between investors in different vehicles.
Our approach
Our Private Capital team led the fund's establishment from initial structuring through to final close, working alongside the manager's in-house legal and finance functions throughout. We advised on the design of parallel and feeder vehicles to accommodate the fund's international investor base, and led negotiations with a number of cornerstone and anchor investors on bespoke side letter terms, ensuring consistency of treatment across the investor base as a whole.
We also worked closely with our Tax and Financial Services Regulation teams to manage the cross-border regulatory notifications required for marketing the fund across multiple jurisdictions, and to structure the fund's carried interest arrangements in a manner consistent with the manager's existing platform.
The outcome
The fund held its final close at €15bn, exceeding its original target and its predecessor fund by a significant margin. The structure adopted has since served as a template for the manager's subsequent fundraises, and the negotiated side letter framework allowed the manager to onboard a wider range of institutional investors than had participated in previous funds.
