DRC Capital is looking to raise $750m (€670.5m) for its next European debt fund.

The amount is the largest the manager has targeted for a fund, according to the Public Employees Retirement Association of New Mexico, one of the first investors in the fund.

DRC raised £487m (€628m) in 2014 for its previous fund in 2014 and £300m for Fund I in 2011.

The DRC European Real Estate Debt Fund III will focus on Western Europe, mostly the UK and Germany and possibly Poland.

Typical transactions will range between $30m and $50m, with a focus on core office, industrial, retail and apartment assets. 

The Public Employees Retirement Association of New Mexico approved a $75m commitment to the fund last month.

Joaquin Lujan, director of rates and credit at New Mexico, said: “The capital raise for Fund III has just started, and I believe we are one of the first investors to go into the fund.”

He noted that the manager had been a strong performer in the past.

“We made a €26m commitment to Fund II in June of 2013,” he said.

“This fund is now 80% invested, and the equity multiple is in the range of 1.3% to 1.4%. There is a great deal of demand for lenders to provide new financing for strong real estate in Europe. DRC does this with whole loans, mezzanine and bridge loans.”

DRC will co-invest $3m-5m of its own capital in the fund, which has a targeted IRR of 10-13%.