M&G Investments has raised £1.35bn (€1.6bn) for its two new junior commercial mortgage funds, with both oversubscribed.

The capital was committed by more than 40 institutional investors from Europe and the US, M&G said.

A total of £605m was raised for M&G’s Real Estate Debt Fund II, aimed at European mezzanine real estate debt.

The firm’s Real Estate Debt Fund III closed at £750m.

John Barakat, head of real estate finance at M&G Investments, said: “The response from pension funds and insurance companies to this new asset class is now extremely positive and, combined with the discretionary capital available to us for the senior mortgage strategy, gives us tremendous firepower to lend across the whole capital structure.”

M&G also said it has appointed Lynn Gilbert to its real estate finance team to lead origination. 

Gilbert previously worked on real estate debt funds at Renshaw Bay and prior to that led commercial mortgage activity at Barclays Capital and Morgan Stanley.