M&G Investments has announced the first closing of its latest issue of Real Estate Debt Funds ("the Funds"), raising £350 million of capital from clients. This capital will be used to fund real estate lending in Europe, managed by M&G's real estate finance team.
The first closing in the series included investments from LGPS Central Limited for £200 million, from the Prudential With Profits Fund for £100 million and from a major UK insurer for £25 million. M&G plans to continue to raise capital for these segregated funds and mandates from global institutional investors over the next 18 months, seeking double-digit returns on direct commercial real estate loans in Europe.
The real estate debt market, currently worth €1.5 trillion, has seen a surge in alternative financing over the past 15 years, with these providers making up 39% of debt in the UK and between 10% and 15% in continental Europe.
M&G's real estate debt team, part of the group's Private Markets business, which manages €86 billion in assets, offers a variety of lending products and is one of the leading providers of alternative finance in Europe.
Dan Riches, from M&G Investments' real estate finance team, highlighted the strong investor support for the funds' first close, noting the benefits of rising interest rates and risk-adjusted returns in the sector. Nadeem Hussain, Head of Private Markets at LGPS Central Limited, expressed satisfaction with the investment in the funds, highlighting the importance to their long-term objectives. Ciaran Mulligan, Head of Investment Management and Oversight at Prudential With Profits Fund, commented on the attraction of real estate debt due to its risk/reward dynamics and its role in portfolio diversification.
Alicia Garcia, Head of M&G Spain, Portugal and Andorra mentioned the growing interest in private debt strategies, highlighting real estate as an attractive asset class for portfolio diversification.
M&G's Private Markets business has a long history dating back to 1848, with M&G Real Estate as one of the world's largest real estate investors. Since 2009, the real estate debt team has invested over £13 billion on behalf of more than 100 institutional investors.
