M&G senior debt fund seeks up to £2bn

M&G Investments has confirmed that it plans to launch a senior debt fund. M&G, which makes senior loans using capital from affiliates of its Prudential insurer parent, hopes to pool further in-house capital with third-party investors as soon as possible and to raise between £1bn and £2bn.

In-house clients are expected to seed the fund with several hundred million pounds. John Barakat, M&G head of real estate finance, said: “We see senior debt appealing more to fixed-income investors than traditional real estate investors, as it offers good relative value  compared to single-A grade corporate debt.”

He said M&G’s 12-strong team expected to have invested over £1.3bn in senior and junior debt in the 12 months to June 2012. M&G also invests in junior debt, via its almost fully invested Real Estate Debt Fund. Its strategy spans senior, junior, whole loans, good-quality secondary loan acquisitions and loan-on-loan finance. This month it provided all £266m of senior finance for Round Hill Capital’s purchase of student housing portfolio Nido.