Arrow Global is pleased to announce that Arrow Credit Opportunities SCSp and related entities, the “Fund”, raised €628.5 million of third-party capital commitments into an 8-year closed end fund structure, drawing commitments from some of the largest and most sophisticated global investors from diverse geographies and sectors.
- €838.0 million achieved in total capital commitments, with €628.5 million from third-party investors
- Targeting €2.0 billion of total AUM before the end of 2020
- Arrow Global to invest at least either 24.9% of the final commitment made to the Fund or €500.0 million as a co investor
- Strong demand across a range of investors by geography and sector
- Deployment of AUM to commence early in 2020, providing additional Asset Management and servicing (AMS) revenue and fund management fee income to the Group
Fund raise is transformational for Arrow Global
Raising the Fund is a major achievement in the development of Arrow Global’s fund management capabilities and is central to the Group’s strategy to accelerate towards a more capital-light model. The benefits of this model include:
- Accelerated achievement of five-year targets
- Faster reduction in leverage due to lower absolute levels of Arrow balance sheet investment compared to recent periods as a result of the co-invest structure with the Fund
- Increased future flexibility around Arrow Global’s capital structure
- New capital light earnings streams from market standard management fees and performance fees payable to Arrow Global as manager of the Fund, resulting in further improvements in the quantum and quality of earnings in the medium-term
- Scalable opportunity to grow capital light AMS activities by offering AMS services to the Fund
- Continuing attractive returns on capital from Arrow Global’s co-investment in portfolios
Lee Rochford, Group Chief Executive Officer of Arrow Global said: “This first successful fund raising is transformational for the Group. It shows we are successfully executing our strategy to transform the business through the build-out of our fund management capabilities. This represents the completion of a significant initial stage of this strategy and part of our continued drive to engage with capital partners and grow our assets under management. I have been impressed with the speed of execution of this fund raising, driven by strong demand from institutional investors and the fantastic efforts of the Arrow Global team.
“Fund management businesses are high-margin and capital-light, delivering strong recurring revenues. Growing our fund management business will allow us to accelerate the achievement of our five-year targets while also providing our investors with access to a specialist and highly attractive asset class through our leading pan-European platform.
“Furthermore, managing a significant pool of third-party capital will grow capital-light revenue in our asset management and servicing businesses through the offering of AMS services to the Fund. When combined with the long weighted average duration of our debt, the raising of third-party funds will have a positive impact on our future funding model.
“We are excited by the fund management business’s potential to transform the quantum and sustainability of our earnings and, as the business evolves further, we expect to provide further guidance on its implications for Arrow Group’s five-year targets. At this stage, the market’s medium-term expectations for the Group’s profitability remain appropriate. In 2020, the financial impact of the Fund on the Group’s profit will be immaterial.”
Zach Lewy, Founder and Chief Investment Officer, said: “We look forward to working with our Limited Partners to make this fund – and future funds – a great success. This fund raise has brought a diverse range of new clients to the Arrow Global Group and we are excited about the opportunity we have to unlock value for this important new client base in our specialist, high return asset classes.”