Owned by private equity firm Permira, PDM was established as an independent debt investing arm in 2007. Its new direct lending fund, Permira Credit Solutions II, attracted investments from pension funds, insurance companies and family offices across Europe, North America, Asia and the Middle East.

PDM will aim to originate deals and invest the fund directly in European companies, filling a liquidity gap which has resulted from constraints around traditional lending.

The eight-year fund will total 800 million euros, an increase from its initial target of 500 million euros following strong demand, with a second close anticipated by the second quarter of 2015, investor sources said.

The fund will have two investment strategies. The first will invest in unlevelled senior secured debt with returns of around seven to ten percent, the investor sources said.

The second strategy will invest across a capital structure in senior and subordinated debt, with returns of 13 to 15 percent. If it invests in senior debt then there is the ability for Bank of Scotland and RBS to lend up to half of the money on a deal to give an extra turn of leverage, the investor sources added.

PDM will work more closely and co-ordinate with Permira to optimise its network and capabilities in origination and analytics, enabling Permira to originate debt deals as well as equity deals. PDM will execute the debt deals, the investor sources said.

To take account of PDM’s growth and emphasis on originating deals, Thomas Kyriakoudis has been appointed Chief Investment Officer of PDM to oversee and coordinate all aspects of origination across the group's debt funds. Kyriakoudis was previously Head of Capital Markets. Peter Gibbs will become Chief Operating Officer of PDM and will also continue his role as Permira’s Fund Counsel for the firm’s private equity and debt funds.

“We believe there is a sizeable imbalance in the supply and demand for European private debt capital today which creates a fantastic opportunity for direct lending funds like PCS II,” Kyriakoudis said.

PDM’s first fund, Permira Credit Solutions I, started investing in 2008 and deployed 1.3 billion over the course of 6.5 years. It is now in exit mode.

(Editing by Christopher Mangham)

By Claire Ruckin