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US bond giant Pimco is set to launch its first European private credit fund, as it seeks to take advantage of investor demand for the fast-growing sector.
The world’s biggest active bond manager, with $2tn under management, has secured informal approval from regulators in Luxembourg — one of Europe’s biggest fund management centres — to create the vehicle, which will be called the Pimco Diversified Private Credit Fund, according to people with knowledge of the process.
Pimco wants to lure wealthy retail investors that have been attracted to private credit because of the higher yields it offers compared with government or investment grade debt, the people said. The market is also popular with institutional investors such as pension schemes and sovereign wealth funds.
The launch comes despite market uncertainty in the wake of Donald Trump’s tariff blitz, as the California-based group aims to exploit the European market as competition for investor money in the US intensifies.
The fund will be run by some of the group’s most senior fund managers, including chief investment officer Dan Ivascyn.
Pimco and Luxembourg’s regulator, the Commission de Surveillance du Secteur Financier (CSSF), both declined to comment.
Even before the recent market volatility, there have been signs that investors have become more wary about investing in the private credit market, which has grown rapidly in recent years.
Barclays’ New York-based private credit partner, AGL Credit Management, has had difficulty raising additional capital for its fund other than from its main backer, Abu Dhabi Investment Authority.
Excluding the commitment from Adia, which has backed AGL since its launch in 2019, the fund had attracted less than $70mn of capital from other investors through the first quarter, filings with the US Securities and Exchange Commission show.
Funds allowing access to private credit remain rare in Europe, although Blackstone launched a similar vehicle in October 2022.
The industry is better-established in the US. In February, Apollo Management and State Street launched an exchange-traded fund which will be able to invest directly in much more illiquid private credit assets.
The Pimco fund will focus on European asset-based credit, buying debt backed by inventory or property. This is expected to represent about 70-80 per cent of its private asset portfolio.
Pimco is a large investor in the private asset-based credit market with $162bn under management in alternative credit and private strategies globally.
Asset managers have also pushed to open up access to other forms of relatively illiquid debt.
In September Fair Oaks, a specialist corporate credit manager, launched the first European-domiciled ETF investing in collateralised loan obligations, vehicles which in turn hold so-called leveraged loans.
