Private debt fund

A debt fund is an alternative investment fund that raises capital from investors, mainly institutional ones, to lend to companies or subscribe to their bonds. For the company, it acts as a non-bank lender: it grants senior, unitranche, mezzanine or PIK loans, negotiates the documentation and holds the loan in its portfolio. In France, it takes the form of a specialised professional fund (fonds professionnel spécialisé) or a professional private equity fund (fonds professionnel de capital investissement), whose lending to companies is governed by a decree published on 26 November 2016. Directive (EU) 2024/927 of 13 March 2024, known as AIFMD 2, to be transposed by 16 April 2026 at the latest, creates a regime for funds whose main strategy is to originate loans or whose loans exceed 50% of net asset value. These funds are in principle closed-ended. Their leverage is capped at 175% of net asset value for an open-ended fund and at 300% for a closed-ended fund. A fund that sells a loan it has originated retains at least 5% of it. According to the France Invest and Deloitte study of March 2026, French corporate debt funds raised €11.4bn in 2025. Foreign funds carried out 24% of the transactions and 54% of the amounts invested in France the same year. The life of the fund, its investment period and the ticket it holds alone determine the term of the loan it offers and its capacity to follow the company in a later acquisition.

A mid-cap company generating €35m of EBITDA seeks €150m to refinance its debt and finance an acquisition. Two debt funds share the loan under a single agreement, €100m for the first and €50m for the second. Each fund holds its share until the seven year maturity.

• The remaining life of the lending vehicle and its investment period
• The ticket the fund can hold alone without calling on a co-lender
• The fund’s policy on selling its loan to third parties
• ESG indicators linked to the interest rate, present in 57% of private debt transactions in France in 2025