HPS Investment Partners has raised $14.3bn from investors for its new private credit fund – Speciality Loan Fund VI. This breaks down as: $10.4bn in the commingled fund, with the rest in funds-of-one, separately managed accounts and co-investment vehicles.

With debt, this takes the deployable assets of the fund to $21.1bn.

HPS now has total AUM of $114bn.

Speciality Loan Fund VI has invested more than $2.5bn so far in 29 deals.

HPS pointed out that the “world’s largest and most sophisticated institutions” are initiating and growing their private credit exposure.

HPS sees investment grade private credit and asset-backed private credit as areas for rapid growth.

As private credit funds raise ever larger amounts of capital, there will be significant knock-on effects on global capital markets. We might see a dramatic reduction in supply for public capital markets – as private credit offers increasingly attractive interest rates, covenant packages, speed, and reduced transaction execution risk to borrowers.

For borrowers, private credit can offer excellent deals. That said, there will be value for many issuers in maintaining a public markets profile and investor base. To protect against the risk of a systemic event in private credit (such as a large number of high profile defaults) that results in private credit supply abruptly drying up for a period of time.