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At a time when the senior direct lending landscape is increasingly competitive, AlbaCore have not only fundraised $1.8bn of investible capital, they have deployed. The secret at this end of the market, according to head of senior direct lending, Luke Gillam, is to recognise the value of partnering up in clubs.

1. Enter deals as a member of a club? [Clutches pearls] Isn’t that something that every private credit fund manager denies doing?

The senior direct lending market is very much a club market. If you want exposure to the best assets, you have to be willing to lend alongside other direct lending funds. In fact, if you look at debt stacks above €150-€200m, very few of these are proprietary. An increasing average deal size, along with the company’s willingness to rely on committed capex and M&A lines to drive further growth, are key factors contributing to the shift toward club deals.

2. Why do direct lending funds often claim to only do proprietary deals then?

At the genesis of senior direct lending, the market was mostly bilateral. Lenders argued that this was preferred as they retained full control of the loan and sourced unique lending opportunities that their LPs could not get access to elsewhere.

However, things have changed. It is now the sponsor that is arranging and setting the terms and most sponsors are looking to diversify their lender list, so the lender is rarely truly a sole lender. The competitive landscape of the past few years is very different now, with multiple lenders chasing fewer, very high quality deals. To ensure exposure to these best assets, it makes sense to take a smaller stake in many, rather than to be the proprietary lender in one.

3. Don’t you get beaten down on terms by the sponsor?

Regardless of the number of lenders that end up in a deal, we are definitely in a borrower’s market for strong assets. We do see lenders arguing to LPs that being the sole lender allows them to dictate terms, but we see it more that in order to be a sole lender you have to undercut every other fund on terms in order to win or to lend to names that others do not wish to.

However, in a club, lenders don’t have to compete quite so hard and will ultimately sign up to the same final terms

4. Other advantages?

Essentially, it opens up a broader set of opportunities which will ultimately create a high-quality and very diversified portfolio.

5. And disadvantages?

We have to be scrupulous with the documentation, particularly around voting rights and minority protections.

6. Winding back, AlbaCore closed a $1.8bn fundraise in March 2025 for its senior direct lending strategy. What is the value you see in European senior direct lending?

In our opinion, Europe looks more attractive than the US. Pricing is better, value is still to be found given the high degree of fragmentation present in the market, and the debt structures are more attractive.

7. How so?

Europe’s net debt to EBITDA ratios seem to be comparable to the US. However, the US has a lot more EBITDA adjustments and higher interest costs given the rate differential. From the data we can see, private credit default rates in the US look to be substantially higher than those of Europe.

In Europe, fragmentation among creditor regimes creates a less efficient market, demanding local knowledge and expertise and fostering long-term relationships with sponsors. Regarding documentation trends, lender-on-lender violence is less common in Europe than in the US, owing to stronger document protections and more robust legal frameworks.

8. It would appear there are others that agree with you. How did you find the fundraising process in 2024 and 2025?

The good news is that we consistently see investors looking to increase their allocations to direct lending and particularly to European direct lending. The asset class remains very compelling. So the overall fundraising environment is a positive one, especially as in certain geographies the asset class appears to be under penetrated in LPs’ portfolios. [AlbaCore’s direct lending strategy had commitments from the Abu Dhabi Investment Authority and MUFJ].

AlbaCore has traditionally been a big provider of junior capital to the market, but we saw a huge opportunity in the senior space, as we can leverage existing relationships with sponsors and advisors to drive the origination effort.

9. You’ve deployed nine deals in nine months. What’s the secret?

Coming from the broadly syndicated market last year, I have been really pleased with the quality of the deal flow in the direct lending world. We have good sponsor dialogue and have had good access to some very high quality deals with both existing and new relationships. 

We look for defensive companies with a diverse customer base, strong contract visibility, and compelling financial profile: our current portfolio includes credits in the business services, TMT, software, and healthcare spaces but we are also open minded on good companies in more cyclical sectors. We’re cautious on high leverage, scrupulous on deal terms, and very proactive about measuring the threat of AI.