Hayfin Capital Management has announced a record period of deployment through its direct lending strategy, having invested €3.7bn in 2020.

The manager reached a final close on the commingled Hayfin Direct Lending Fund III and its related separately managed accounts in 2020, raising in excess of €5bn to deploy into performing loans to European middle-market companies.

Investors include the UK’s Staffordshire Pension Fund and the North East Scotland Pension Fund. British Columbia Investment Management Corporation – which agreed to acquire the majority shareholding in the firm back in 2017 – has also committed capital, a spokesperson for Hayfin confirmed.

During this record period of activity, Hayfin bolstered its investment team, business development function and back-office operations with 35 new hires, it said.

Within its direct lending strategy, Hayfin focuses on the provision of senior-secured loans that show strong returns relative to their risk profile and an emphasis on downside protection.

Prior to the outbreak of COVID-19, Hayfin self-originated a high volume of primary investment opportunities through its local sourcing teams across six offices globally and, despite primary issuance in direct lending markets falling during the pandemic, the manager’s extensive origination capabilities, expanded team and large portfolio of existing borrowers allowed the firm to accelerate its rate of deployment in 2020, it said.

Hayfin said its latest fundraise was oversubscribed and attracted capital commitments from a broad range of institutional investors globally, including both new and existing LPs, comprising public and private pension funds, sovereign wealth funds, insurance companies, endowments, consultants, financial institutions and family offices.

This represented Hayfin’s largest capital-raise to date across its strategies, exceeding the more than €3.5bn raised for the previous vintage of the firm’s direct lending strategy in February 2017.

Tim Flynn, chief executive officer and co-founder of Hayfin, said: “While the macroeconomic environment is undoubtedly vastly different now than in years past, we will continue to invest in strong European middle-market companies, as their financing needs grow and traditional sources of capital remain constrained.”

He added that Hayfin has “one of the longest track records in European private credit, with a proven ability to invest throughout the cycle, protect against downside risk and generate strong risk-adjusted returns”.

Since it was founded in 2009, Hayfin has invested more than €24bn of capital across more than 375 portfolio companies.

To read the digital edition of IPE’s latest magazine click here.