Federated Hermes Launches Third European Direct Lending Fund

Federated Hermes, a leader in active investment management, has announced the successful first phase close of its European Direct Lending III Fund (EDL III). The fund marks the third installment in the company's European direct lending platform. This inaugural fundraising round attracted commitments of 50% of the targeted fund size from both previous investors and new institutional backers, with further fund closures anticipated in 2025. Federated Hermes' direct lending approach emphasizes lending to small and mid-sized Northern European businesses in stable, non-cyclical industries. Notably, since the launch of its first fund in 2016, the Direct Lending team has reported a zero-default rate, maintaining a strategy focused on conservatively structured loans and recurring revenue streams. Partnering with leading European and UK commercial banks allows the firm to source high-quality lending opportunities. Moreover, Federated Hermes integrates ESG considerations into its loan structuring process, assigning proprietary ESG ratings and conducting ongoing quarterly reviews. Patrick Marshall, Federated Hermes' Head of Private Credit, attributes the growing investor confidence in EDL III to the track record of the investment team and the quality of their meticulously selected loans. The focus remains on capital preservation, stable income, and risk-adjusted returns.