A fund managed by real estate credit company Velo Capital has received an initial €136m in capital commitments.
Urban Partners – a capital pooling platform created by NREP, Velo Capital, Luma Equity and venture capital firm 2150 – has announced that the Velo Mezzanine Credit Fund (VMC) has a target of raising €600m and is expected to close within the first half of 2024.
The fund’s €136m first close attracted capital from a number of Urban Partners’s existing institutional investors.
VMC invests in real estate developments and existing assets across Northern Europe including Germany and the Nordics, as it targets a 10%-plus net internal rate of return, Urban Partners said.
The closed-ended fund, categorised as Article 8 product under the EU Sustainable Finance Disclosure Regulation, has an investment pipleine of over €500m.
Claus Mathisen, CEO of Urban Partners, said: “In the current market, some banks are pulling back. They are leaving a financing gap that represents a significant opportunity for alternative lenders.
“Business opportunities are immense, and with this new fund we want to demonstrate how alternative credit solutions can propel a green financing wave with the urban transition in focus.”
Emanuele Bena, managing partner at Velo Capital, said: “At Velo Capital, we believe that we have the right skill set to be a flexible long-term partner and to play a key role in the green transition.
“Our investment advice philosophy and processes are structured to ensure that we can deliver through the cycle, with an in-depth approach to asset management and risk underwriting, local market knowledge and strong industry relationships.”
Last month, real estate investor NREP partnered with Velo, private equity investor Luma and 2150 to invest in assets, companies and technologies that will accelerate decarbonisation and transform urban neighbourhoods.
The companies launched Urban Partners, the ”first dedicated pool of constructive capital – with returns being measured alongside impact – with €5bn available to invest”.
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