Hayfin today announces the successful close of Hayfin Direct Lending Fund V (“DLF V”), having attracted capital in excess of €15 billion, significantly exceeding its target for the fundraise. The fundraise comprises the commingled Hayfin Direct Lending Fund V, which has reached a final close, together with related investment vehicles. At the time of the close, DLF V had already deployed more than 50% of commitments across over 35 companies. 

Through its Direct Lending strategy, Hayfin sources, structures and invests in performing senior‑secured loans to primarily European middle‑market and upper‑middle‑market businesses, with an emphasis on downside protection and robust cash flow generation or asset coverage. The vast majority of these loans are originated through an extensive relationship-based primary sourcing network spanning 13 offices and dedicated sector‑specialist teams. This broad-based origination model has allowed Hayfin to build a diverse portfolio of loans to a wide range of cash‑generative businesses, with minimal exposure to software credits deemed most susceptible to AI disruption. Hayfin invested a record €7.1 billion into Direct Lending transactions in the last twelve months, bringing total strategy deployment to over €38 billion across more than 350 investments since the firm’s inception. 

The fundraise attracted capital commitments exclusively from a global institutional investor base, comprising public and private pension funds, financial institutions, insurance companies, sovereign wealth funds, funds of funds, endowments, consultants and family offices. Recent strains within semi-liquid US private credit funds for retail investors have accelerated LP demand for conservative fund structures, in line with Hayfin’s approach of securing locked-up capital in closed-ended drawdown and institutional evergreen vehicles. This helped Hayfin to achieve the most significant milestone yet for its flagship private credit strategy with the successful close of Direct Lending Fund V, more than doubling the amount raised for Direct Lending Fund IV, which closed in August 2023 with over €6bn in total commitments.  

The DLF V fundraise also includes the successful close of a rated note feeder which contributed approximately $600 million of total investable capital. The structure, advised on by Proskauer as Legal Counsel, provides insurers with capital-efficient access to Hayfin’s European Direct Lending strategy, reflecting the firm’s commitment to broadening access to its private credit platform across a diverse range of institutional investor types. 

Mark Tognolini, Co-Chief Executive Officer and Co‑Founder of Hayfin, commented: “We are very pleased with the successful close of Direct Lending Fund V and grateful for the strong support from both new and long‑standing investors. At a time when parts of the private credit market are experiencing heightened volatility, this fundraise reflects confidence in our disciplined underwriting, our highly specialised team, our conservative approach to fund structuring and our differentiated origination model, which has been built to perform consistently across market cycles. 

“In recent months, longstanding differences between the US and European private credit markets have become even more pronounced, with European lenders continuing to benefit from greater market fragmentation, continued bank retrenchment and a predominantly institutional capital base. Against this backdrop, we are well placed to take further market share and support high‑quality European businesses with flexible financing solutions – as we have consistently done in other periods of volatility – while preserving our focus on capital preservation and downside protection.” 

Hayfin was advised on the fundraise by Macfarlanes. 

Since it was founded in 2009, Hayfin has invested over €55bn of capital across more than 500 portfolio companies via its private credit strategies. 

When preparing to host Hayfin’s North American clients at our annual US AGM in New York last month, we knew three topics would be at the forefront of their thinking: software, retail redemptions and the Iran conflict. The discussion became a timely test of how private credit managers can demonstrate that they are the right partners to help investors navigate market volatility.

New AI models have triggered a repricing of business durability in the face of accelerating disruption, prompting LPs to examine their GPs’ exposure to potential losses in software, where private credit is often seen as heavily concentrated. At the same time, a surge in redemptions and gating in some US semi-liquid private credit vehicles has forced price discovery and raised the prospect of supply shocks. Finally, despite the fragile ceasefire reached in April, tensions in the Middle East continue to ripple through supply chains, commodities pricing and energy markets.

These three trends are playing out differently on either side of the Atlantic. In the case of the first two, the impact should in theory be more muted in Europe. Software is a smaller part of European lending than in the US, where it accounts for an estimated 20–25% of private credit activity. In Europe, higher-risk ARR lending to pre-profit software businesses with unclear paths to deleveraging is far less prevalent. Similarly, while retail capital has grown to 20–25% of global private credit AUM, withdrawals have been concentrated in US Business Development Company (BDC) and interval fund structures rather than in European vehicles, which are still relatively nascent.

But Europe is unquestionably more exposed to geopolitical risk – at least from the specific perspective of disruptions to energy supply and the resulting increase in inflation.

Is your money safe?

In all three cases, the first question that LPs should be asking their private credit managers is how they will preserve capital, protect value and limit downside risk within their existing portfolios.

We have previously explained why we remain underweight software across both our Private Credit and High-Yield & Syndicated Loans businesses. Our software exposure across Direct Lending portfolios is less than 6%, and below 5% in our latest vintage, which compares favourably with peers.

We have managed that exposure through prudent portfolio diversification and a clear view that software is not only potentially vulnerable to generative AI disruption, but also one of the most competitive parts of the market. Where we are invested, those loans are to large, mature, high-growth companies backed by sector specialist GPs. We have grounded our credit judgment in traditional credit metrics rather than uncertain enterprise value assumptions.

Uncertainty is not an environment we are waiting to pass. It is the environment we are built for.

We are similarly well placed on liquidity. Hayfin’s private credit strategies rely exclusively on fully locked-up institutional drawdown funds, with no retail capital. We had already been seeing growing demand for institutional vintage solutions that operate as drawdown vehicles, with redemptions achieved through natural portfolio run-off rather than forced asset sales. That trend now looks set to accelerate.

No manager, least of all one investing in Europe, can be fully insulated from the effects of conflict involving Iran. We saw during Covid and in the early stages of the war in Ukraine how shocks to energy, transport and agricultural supply chains can quickly spread through interconnected markets. Higher energy, fertiliser and freight costs would feed into food prices and create broader inflationary pressure.

Our dedicated Maritime team, with 15 industry specialists, more than $4 billion deployed and over 100 vessels acquired, gives us added insight into how global supply chains are being affected.

Where can managers create an edge?

The second question LPs should ask their GPs is how they are positioned to capitalise on these market dislocations. Throughout Hayfin’s history, periods like these have created the conditions for us to grow, gain market share, deepen relationships with borrowers and LPs, and deliver some of our best-performing investment vintages. Uncertainty is not an environment we are waiting to pass. It is the environment we are built for.

The obvious counterargument is that the private credit industry as a whole tends to gain market share from banks and syndicated markets during periods of disruption. The more important question, then, is what positions us to deliver compelling investment returns in a more uncertain environment relative to our competitors.

Our European focus is certainly an advantage. We consider ourselves the European home team, with 17 years of track record and a platform built to operate across fragmented jurisdictions, languages and legal regimes. The distinctive, longstanding opportunity set in Europe, as we have previously discussed, certainly still applies. There remains room for further growth, with the UK and EU’s combined GDP totaling 90% of the US, but with private markets just one third of the size. Additionally, as a shallower market than the US, Europe can reprice quicker in environments like this.

Hayfin’s adaptability and ‘one-firm’ culture, both of which I described earlier this year, are also well-suited for the current landscape. Our broad set of complementary strategies allows us to finance both growth and stress, and to lean into the parts of the market offering the best risk-adjusted returns, as this rapidly shifts around us. By operating in a de-siloed, integrated manner, when markets “flash amber”, we draw on the insights and experience of the whole team to re‑underwrite portfolios, reassess risks and recalibrate pipelines.

Recent market stresses will also affect future investment vintages. One potential second‑order effect of the recent strains in US private credit is that both LPs and borrowers will increasingly favour managers with more conservative approaches to fund structuring. US lenders might pull back from European markets, tipping competitive dynamics in favour of homegrown European managers with more institutional capital.

Patient capital – at scale

Many of the themes discussed here are only beginning to play out. We will remain patient, focusing first on supporting our existing borrowers as the market comes to us.

At the same time, we are preparing to invest selectively through our Tactical Solutions, Special Opportunities and Private Equity Solutions strategies. In these areas, choppier markets and a rising tide of €300 billion in net asset value without sponsor capital support are likely to drive demand for hybrid liquidity solutions.

With a significant undrawn capital position of c. €7bn today, we have the scale and firepower to capitalise on the opportunities that may present themselves in the months ahead.

Our industry is undergoing rapid change. When Tim and I first started Hayfin in 2009, private markets were still in their infancy. The term ‘private credit’ was yet to enter the mainstream. Fast-forward to 2026 and the asset class has grown considerably.

Media, regulators and governments now take a keen interest in what we do. Capital allocations – first from institutional clients, but increasingly from high-net-worths – have risen exponentially. Global private credit AUM has more than trebled in the past decade to over $1.5trn.

In this more mature market, investors are rightly asking their managers what sets them apart from the competition.

We’ve always answered this question with reference to three key competitive advantages:

We see these three attributes becoming cornerstones of the industry’s most successful players.

As our platform has evolved over the past year, following the completion of our management buyout and the addition of Mubadala, Samsung Life and AXA IM Prime as shareholders alongside Arctos, these three differentiators ring even truer for Hayfin today.

Why scale matters

Market access has historically been a barrier to entry in private credit. We’ve previously outlined why that’s particularly the case for the fragmented European market.

However, we believe the size of our platform, reach of our network and depth of our proprietary data – gathered over more than 15 years, in the course of investing over €55bn into 500+ companies – should help us to continue retaining and growing lending relationships with high‑performing businesses in the years ahead.

With higher interest rates dragging on transaction activity in the post‑Covid period and slowing deployment for many funds, incumbency has proved a competitive advantage. Approximately half the capital deployed in our direct lending strategy over the past two years has been extended to existing borrowers. With €30bn of assets in the ground today, the opportunity to extend capital to existing borrowers will remain an important source of deal flow for Hayfin. That means we can maintain steady growth independent of broader M&A market cycles.

As AI adoption within private credit accelerates, and technology is increasingly used to crunch numbers and supplement human judgement during the underwriting process, we believe it’s the managers with the largest pools of historic investment data who will be best placed to generate insights.

Finally, we expect the benefits of increased fund sizes and lending capacity to intensify over time. A larger capital base and the ability to make bigger commitments should strengthen GPs’ hands, helping them achieve greater portfolio diversification and negotiate improved terms. With deal sizes continuing to rise, access to capital and close partnerships with blue‑chip LPs will be essential to remaining relevant.

How to adapt amid volatility

With continued volatility across markets and geopolitics, being dynamic and adaptable is crucial. European capital markets are smaller and less efficient than their US counterparts, and the risk‑return trade‑off can shift quickly. To counter this, we have deliberately designed our business to be able to pivot to capitalise on value and opportunity. This is reflected in our broad product suite, which enables us to serve the needs of both borrowers and LPs.

The emerging opportunity within asset‑backed lending is one such example. We are seeing increasing client interest in Europe in asset‑backed deals, as investors become more familiar with private credit and seek more complex, higher‑return and less commoditised opportunities. These types of investments have been a key focus of Hayfin from day one, with €12bn deployed to date, largely through the dedicated expertise we’ve built in sectors such as healthcare, real estate and maritime.

The benefits of flexibility are likely to keep rising alongside the evolution of the asset class. New deployment opportunities should emerge as private credit finances an ever‑increasing cross‑section of European economic activity. That steady expansion of private markets has driven the Bank of England’s inaugural exploratory analysis into how they intersect with the UK real economy, which we’re pleased to be participating in this year.

What a one‑firm culture means

The final ingredient to Hayfin’s success is our single‑firm culture. It has always been our aspiration to be Europe’s most integrated platform. If investors are looking for a multi‑boutique or a ‘pod shop’, there are many fine examples in the market. We aren’t one of them.

The Hayfin team now owns a substantial majority of the GP, and most of our employees are shareholders. This breadth of ownership is an important differentiator for a company of our type and size. That level of independence, autonomy and ownership creates value for LPs by enabling us to continue executing at pace and investing in the next generation of Hayfin leaders.

When we founded Hayfin in 2009, our ambition was to be a first mover capitalising on the emerging opportunity in European private credit. By building scale, resilience and adaptability in a firm that understands the power of collaboration, we believe we have created a platform for all investment environments. In today’s world – characterised by heightened risks and uncertainties alongside abundant opportunity – this flexibility is paramount.

Hayfin continues to be well positioned to support its clients, and I’m excited for what’s to come in the rest of 2026 and beyond.

Hayfin has appointed Raj Paranandi as Chief Operating Officer (COO), based at the firm’s London headquarters. 

Raj joins Hayfin from MarketAxess, an international financial technology company that operates the leading electronic trading platform for institutional credit markets, where he served as COO of EMEA and APAC. Prior to this, Raj spent 10 years in leadership positions at UBS and he comes with over 25 years of experience in Financial Services. 

As COO, Raj will succeed Mark Tognolini, who will assume the role of co-Chief Executive Officer alongside Tim Flynn. This evolution in leadership reflects the collaborative management style that Mark and Tim have maintained since co-founding Hayfin and is designed to further strengthen the firm’s ability to serve its investors, borrowers, and partners. 

Raj Paranandi, COO of Hayfin, said: “I am excited to be joining Hayfin as the firm continues to experience strong growth. With a deep origination network and unparalleled connections across the European market, the firm has established an enviable track record. I look forward to building on this as the business continues to scale, attracts talent and deepens its market footprint.” 

Tim Flynn, co-CEO of Hayfin, said: “Mark and I are delighted to welcome Raj as COO of Hayfin. His deep experience and record will put the firm in great stead as we accelerate our expansion and capitalise on the growing credit opportunities for our investors.  

This is an exciting period for the business. Our partnership with Arctos and established reputation for excellence enables us to navigate market volatility and geopolitical uncertainty while positioning the firm for continued success.”