While many European direct lenders are struggling to hit their fundraising targets, Hayfin has just pulled in more than €15bn.
On Cloud 9fin, Synne Johnsson speaks with Hayfin’s head of direct lending Mark Bickerstaffe about fundraising, deployment and the changing balance of power in European private credit. He explains how investor diversification away from the US has helped Hayfin attract capital.
The conversation also examines portfolio resilience, inflation risks and artificial intelligence. Looking ahead, it touches on refinancing challenges around 2028 and 2029 maturities, opportunities in capital solutions and asset-backed lending, and reasons for cautious optimism about deal activity later in 2026.
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Episode Transcript:
This transcript was generated with AI assistance. Report any material inconsistencies or inaccuracies by emailing podcast@9fin.com.
Synne Johnsson
Hello, and welcome to Cloud 9fin, a podcast on all things leveraged finance. We follow corporate debt from issuance to redemption, credits from performing to distressed and everything in between. I'm Synne Johnsson, editor at 9fin's private credit credit team, and today I'm here with Mark Bickerstaffe, head of direct lending at Hayfin. Welcome to 9fin's podcast, Mark.
Mark Bickerstaffe
Thanks very much. Great to be here.
Synne Johnsson
Yeah. And I think first things first, you recently done a pretty big fundraise, €15 billion, which is great. Congratulations.
Mark Bickerstaffe
Thank you.
Synne Johnsson
And that's such a big fundraise. It further proves this trend that we've seen in the market of bifurcation when it comes to fundraising. Some fund managers have struggled to raise money while others thrive? And why do you think Hayfin is falling into that latter category?
Mark Bickerstaffe
I think we've definitely benefited through this fundraise from an increased investor focus on Europe. And so with some of the macro situation over the last 12, 24 months, I think on the margin, you've definitely seen investors rebalancing portfolios away from the US towards other geographies. I think Europe has definitely been one of the big winners of that diversification. I think investors, when they look at Europe, it's an opportunity to gain exposure to a market that's somewhat less mature than the US, only less competitive and less steep.
Local roots help Hayfin win capital
It means managers with the right origination platform can find pockets to source attractive risk return. I think, Hayfin, investors have looked at us favorably as one of the largest and one of the longest standing managers in Europe. And when you look at, again, Europe versus the US, there's fewer managers of real scale. And it's harder to build a team in Europe. You need to be local. And we've spent 17 years building out one of the largest local teams. It's key for broad-based origination relationships. We believe are built locally. That's how we source deals. It's key as well on the downside, actually being local to work out situations. And I think the length of time we've been in the market, it gives us a real benefit of incumbency as well. We have one of the largest portfolios of existing borrowers in Europe, and that continues to generate a lot of deal flow for us, even in low M&A environments as we've seen today, really.
Fundraising under scrutiny
Synne Johnsson
And private credit has caused quite a few headlines recently. How have you found fundraising in a market where private credit has been under increased scrutiny?
Mark Bickerstaffe
I think, I certainly agree with you. There's been a lot of scrutiny out there over the last 12, 24 months. I think our investor base at Hayfin is institutional. So a lot of the focus and the scrutiny around US BDCs, retail capital, semi-liquid vehicles hasn't really impacted us or impacted on our fundraise. And if anything, something of a tailwind towards the end of fundraising with, I think, institutional investors looking for more conservative fund structures. And I think generally those investors are very sophisticated. They understand the attractiveness of private credit as an asset class. They see how it's grown to be a key part of the economy today. They view it as a key part of their own asset allocation and portfolio construction. It gives steady income. It gives downside protection. It's become a real key part of the asset allocation decision. And I think a lot of the factors that support the growth of the asset class are as valid today as they have been over the last 10, 20 years. Lending, it is a cyclical business. It will go through cycles. It will go through periods of scrutiny. I think what we found with our investor base is the ability to look through those periods and actually look at the longer term drivers benefits and the reasons to include an allocation to private credit within portfolios.
Synne Johnsson
And how did this fundraise compare to previous fundraise? Was there any changes in the conversation with the LPs? Did you notice any difference in LP strategies?
Mark Bickerstaffe
No, I think, as we talk about with the higher scrutiny on the asset class, because we just talked about all the reasons why it remains a key allocation, But there's a real focus on manager selection today and track record and a real focus on diligence around that track record and diligence around the team in particular. So for us, DLF5, obviously our fifth vintage, very long track record to look at of how we originate risk, how we construct our portfolios, how we manage repayments. Importantly, how we manage our mistakes or the investments that don't go to plan. And I really think that track record, that consistency, that discipline and approach, also consistency in the team, I think give investors a lot of confidence. In terms of the investor base, as I mentioned, it's consistent from previous vintages to today and it's institutionally focused.
What have we seen change? Maybe a little bit. We've definitely seen growth from some geographies where we've had less investors in the past. I guess we started talking about it, but interest from other geographies, whether it's the US, whether it's the Middle East, Korea, all actually looking for exposure into Europe. We've definitely seen that as a trend. As part of this fundraise, we've put in place structures to actually make it easier for investors in those countries to get exposure to Europe. And maybe the one other area where I think the conversations continue to evolve is multi-strategy.
So increasingly, larger LPs looking to larger managers who can provide a full solution of credit products or credit risk. So we've certainly seen those discussions that people, investors perhaps in the start have started with a direct lending allocation, but are now looking at tactical credit or special sits. And how can you combine that into one structure and give the manager that you trust flexibility to allocate where they see the best risk return?
Putting a larger fund to work
Synne Johnsson
Yeah. And €15 billion, that's a lot of capital. Will it impact Hayfin's investment strategy at all, especially considering the slightly lackluster M&A market?
Mark Bickerstaffe
I mean, the short answer is no. And you can imagine that's a topic we've spent a lot of time with investors discussing. Consistency of the strategy is very important to us. Continue to offer investors the same senior secured risk profile, high quality mid-market, upper mid-market companies, continue to build diversified portfolios, focus on the downside protection. So no shift from strategy. As we think about the larger fund size, we're fortunate we're in a growing market. So private credit continues to grow, win share from banks, BSLs, the size of companies that we can address continues to increase. Even within Europe, there's still geographical growth as well. We've talked in the past, I know that we opened an office in the Nordics last summer. We're now 12 months into that. We've seen real deal flow come out of that geography where we didn't have a presence before. Think about a bigger fund size, but actually a market that's growing as well. And I think from a competitive positioning as well, we want to be the lead lender in our transactions. We want to be driving the direct dialogue with our borrowers, with sponsor clients. We want to be in control if things don't go to plan. And actually the larger fund size is really important to be able to deliver that and go to market with a strong message in terms of our ability to take 100% of transactions.
And then on the M&A environment, look, I think you're right. It's been a subdued first half, and I think people came into 2026 expecting a real recovery in volumes. Hasn't come through yet for various factors, whether that's the Middle East situation in Q1, the concerns around AI and software. When I look at our own deployment, we've been busy. In 2025, we invested just under $6 billion. When I look at our year-to-date investment activity, we're around four and a half today. And so, yes, less M&A, but actually, we've seen a lot of activity come out of the portfolio and a real benefit from incumbency on situations, meaning we can position in advance of M&A transactions that we know are happening. And then the one last thing I'd say is the run-in through July, I would say we saw an actual step change in terms of activity. So we did see a real pickup in M&A in July and maybe on the back of deals that were deferred in the earlier part of the year on the back of markets that had become a bit more stable. But we certainly saw a pickup towards the end of the pre-summer.
Retail redemptions reshape lending capacity
Synne Johnsson
That's promising. So hopefully a very busy H2. And taking a step back and looking more at the state of the private credit market as a whole. Obviously, the BDC redemptions have been a kind of common or a big topic as of late. How has that affected the European market? And have you guys seen any differences in the European space?
Mark Bickerstaffe
I mean, for us, for Hayfin as a firm, we don't have that retail semi-liquid capital, so no direct impact on us. In Europe, more widely, definitely less of an impact than the US. When we try and size the market, our best sense is it's 15% to 20% of the US market. Private capital market is in those semi-liquid vehicles. In Europe, it's a fraction of that, it feels less than 5%. So definitely a smaller direct impact in Europe. On the deal side though, We've probably two observations we'd make. One, market liquidity and ticket sizes that managers can take and hold. I think that has reduced. So I think the US BDCs typically have a bucket of around about 20% capital raise that they can invest outside the US. And a lot of that has been invested in Europe. So I think with less availability there, we've seen many large managers who in perhaps 2024, 2025 could be in Europe saying we can underwrite a billion, maybe even above a billion ticket size. I think this year we've seen that drop. So it's more 200, 300, 400. So that has an impact.
And again, going back to our positioning, actually in that context, speaking for larger tickets is a real big competitive advantage. So that's one impact we've seen on the market. The other one would be more on the borrower side, where we're starting to see borrowers pay attention to funding sources as well. So we've seen the first couple of times on grids and term sheets that we've received from borrowers asking around lenders' funding sources and exposure to retail or semi-liquid vehicles, which is interesting. We hadn't seen that before. But when you think about one of the big benefits of private credit, why sponsors will choose private credit over BSL, is that certainty of a long-term partner, a locked-up capital, ability to continue to access to fund growth plans. So it's quite interesting to see that even on the sponsor borrower side now, they're thinking about that when they're choosing their partners to work with.
Synne Johnsson
That's very interesting. So that should be good for you guys.
Mark Bickerstaffe
Indeed.
Testing portfolio resilience
Synne Johnsson
Yeah. And the other thing that we are observing in the market now that private credit is maturing, it's going through the cycle, is that there is an increase in stressed and distressed situations. However, it's quite a private market, so it's difficult to hear about these things. But what are you seeing in that area? Maybe especially with the saspocalypse and everything, this has become even more of a topic.
Mark Bickerstaffe
Yeah. Again, the short answer, we're not really seeing more stress in the portfolio today, which when you think about the macro environment, some of the shocks we talked about, it's really quite impressive resilience of that mid, upper mid market. So I'd say across the book, we're generally seeing companies with revenue and EBITDA growth perhaps slightly lower than it was two or three years ago as inflation has come down. But good growth. When we look at our watch list specifically, I'd say the levels are in line with historical averages. It doesn't feel like it's elevated today. We went through something of a peak in terms of watchlist names through late 23, 24, as that high inflation period had an impact on some borrowers. But we've worked through that. And it feels actually over the past 18 months, we've seen watchlist names declining. So overall on portfolio health today, we feel pretty comfortable. I think you alluded to it, but we're always trying to think, what about looking forward? How do we think about it looking forward? And I guess there's several areas there we're focused on. So one would be, what's the direct and indirect impacts from what's happened in the Middle East? And we've obviously been through a period, first half of this year, of higher oil prices.
And how does that feed into inflation? We're not seeing that in the portfolio today, but we lived through 2022, 2023. We know it can take two or three quarters for inflation to actually feed into company reporting. That's something we're watching closely. And then you mentioned it, but obviously the other big area of focus is AI impact. A huge focus for us across the portfolio, trying to assess in this period what impacts are. It's a process we started over two years ago. We actually hired consultants back at the start of 2024 to review the book, go through it, try and identify pockets. Actually, they use a traffic light system of categorizing the risk in the portfolio. We've taken the learnings from that and fed it into our new investment approach. When we look at the portfolio, we actually feel we're underweight to the market on software exposure today. We have across our direct lending books, it's about 6% software, but that's obviously an area of focus. We have about 15% to 20% where we would put it in medium AI risk. Then we think the remainder of the portfolio is low risk, but that low risk doesn't mean no risk. We think that all businesses are going to have to adapt and change. We're spending a lot of time proactively engaging with management teams, understanding their AI strategy, and actually really trying to focus on what are the KPIs that they're tracking and we should be tracking to try and understand how AI is impacting either positively or negatively.
Getting ahead of the maturity wall
And then maybe the final area we focus on looking forward on the portfolio, which again is a topical area we've discussed in the past, But the 2028 and the 2029 maturities, which go back to that 21, 22 vintage, which were structured pre-rates increases, multiples paid by sponsors at the time were pretty high. I fully expect that that vintage is going to take longer to exit and goes back to a lot of the concerns around DPI. We've spent a lot of time going through the portfolio, categorizing it into those companies that we want to support. High quality businesses want to continue to support, how can we refinance them? Look at the ones that actually there may be something needed in order to make that refinance happen, whether that's equity or PREF or some structuring. And then actually looking at those where actually we prefer to just exit those investments. And so we think that's going to be an increasing market theme in 2027. And our approach is to be really proactive and on the front foot in terms of working out how we want to deal with each of those situations.
A higher bar for software lending
Synne Johnsson
Yeah. And just going back to SaaS for one second, what is your take on new SaaS deals now or SaaS and tech?
Mark Bickerstaffe
We are open to it. So we've continued this year to look at new deals in the software and the tech space. Won't surprise you that it's been a higher bar through our business selection and through our investment committee. But like everyone, we've spent a lot of time on frameworks to assess that risk as best we can. And we believe, we're not believers that all software is going to disappear. And we do believe that certain companies have moats and whether that's domain expertise or proprietary data or systems of record or the mission critical activity. So we do think we've got a good framework for assessing it. And one of the reasons I think we ended up today relatively underweight software, so I actually think when I look at it from a portfolio perspective, we have room to add, which maybe some don't necessarily have. But one of the reasons we ended up underweight was partly AI concerns, but I'm not saying we predicted where AI was, but actually we saw some of the software deals were the most aggressive in the market through 22, 23, 24. Leverage was very high. So I think actually if we see structures become more sensible, we see potentially pricing better, I actually think it could be very interesting for us. With the caveat that you can imagine anything that has an AI flavor to it is hotly debated in RIC at the moment.
Finding value beyond direct lending
Synne Johnsson
Yes, I can imagine. And if we're looking beyond traditional direct lending, where are you seeing the most interesting growth happening at the moment? For example, asset-based finance, nav lending, opportunistic credit, etc.
Mark Bickerstaffe
One of the big advantages at Hayfin is we do operate one private credit team. So we have 90 plus investment professionals that they sit across our direct lending business, our tactical solutions business, our special ops business. We're very focused on ensuring we don't have silos and we're sharing knowledge and we're sharing information. Let's us see a really broad range of opportunities. Let's us be selective on where we invest and let's us assess actually relative risk return as well. So I'd probably pick out, I guess, two areas where we see that particularly attractive at the moment. The first would be our tactical solutions or our capital solutions business. That's our low mid-teens return strategy above direct lending, but below special sits target returns. And we think that the supply demand dynamic is really favorable. Like there are more demand for capital than there is supply of capital in the market. Today. And one of the themes we just talked about was the longer hold period for those 21, 22 vintage deals. I do think capital that can provide solutions there, whether it's some structured solution to give back capital to solve DPI issues for sponsors, or whether it's address those maturities we talked about, we actually think there's a real need for capital in that space. So that's one particular area we're focused on. The other would be asset-backed and not particularly new for Hayfin. It's been one of our biggest areas of focus since day one, I think. We've invested, I don't know, over 12 billion in asset-backed opportunities. A lot of it within the specialist verticals we have here. So real estate, maritime, to a degree healthcare, although there it's more intangible assets rather than hard assets. But I think we increasingly see investor demand there for less commoditized transactions, actually at risk premium, but still with the downside protection of the actual asset base behind you.
CloserStill and Hyve show incumbency paying off
Synne Johnsson
Yeah. And H1 is just done. Other than obviously the 15 billion fundraise, what was your highlight?
Mark Bickerstaffe
The fundraise was a big one. So it's great to have that done. Definitely spent less time on flights this year as a result, although we could continue across our other strategies. So the team are busy. But perhaps on the deal side, we talked about it's been a lower M&A environment, fewer deals done, certainly more concern around businesses that are AI exposed and software we talked about. One sector where we have seen M&A is B2B conferences, events, and that's actually a sector at Hayfin we've invested in since I think going back to 2012. And I think in this environment of AI concerns, there's a real value put on live experiences. And I think these businesses that offer curated meetings, face-to-face interactions, customer suppliers, I think that's a real tailwind. And so we've seen M&A activity there. And there were two large transactions in Q2, both UK businesses, one called Closer Still, one called Hive, where we were the incumbent lender and we were able to support them, go through M&A transactions with a change of control. And they're businesses we'd supported since COVID and pre-COVID in the case of one. So we'd seen those businesses through challenging times. We saw them through good times. We supported them in terms of making acquisitions. And you build a really good relationship with the management teams. So I think for us, It's really good to see both of those transact. Great to see good exits for the sponsors and really exciting for us to be able to continue on the other side. And it's a good example of that, that incumbency that we talked about. And so actually having the relationship really, really key in terms of winning the new deals there.
Synne Johnsson
Yeah, no, it's great. And I think, yeah, those two deals we covered and they seem like pretty good deals. Also, the mandatory question with all of these things, especially as we're at the beginning of a new half and new quarter, what are you expecting for the rest of 2026?
Mark Bickerstaffe
Good question. Always hard to predict. Actually, July was really busy, which I do think actually bodes quite well as people come back to the desk and start again in September. But we talked about volatility.
We've had these periods before where we know there's a backlog of deals and then various macro events have shaken that. I think putting that to the side, I think our expectation heading into September and into Q4 is actually we'll see a pretty active market again.
Synne Johnsson
Exciting. Exciting times. Well, thank you so much for taking the time to be on 9fin podcast.
Mark Bickerstaffe
Cool. My pleasure.
Synne Johnsson
And thank you to the listener for tuning in. Please let us know if you have any feedback. You can reach us at any time by emailing podcast@9fin.com.
