About Us News room Principal® direct lending business launches private credit fund
June 04, 2024

Principal® direct lending business launches private credit fund

(DES MOINES, Iowa) — Principal Asset ManagementSM today launched the Principal Private Credit Fund I, offering exposure to lower and core middle market loans, with immediate access to these direct lending investments. The fund will target 90% plus exposure to private credit and offers investors enhanced yield and return potential through a disciplined credit investment process. This fund is managed by Principal Alternative Credit, the direct lending investment team of Principal Asset Management.

Direct lending has become increasingly popular as investors recognize the value of the asset class. The yield premium and floating rate structure of direct lending loans have contributed to the asset class delivering appealing returns through time, and notably strong performance in a higher interest rate environment. Investors appreciate many qualities of private middle market loans such as the senior secured first lien nature of the asset class, reasonable leverage levels, financial covenants and exposure to industries benefiting from positive secular trends. These appealing attributes of direct lending are highlighted in the lower and core middle market, which are segments of focus for Principal Alternative Credit direct lending.

"In the current market environment, many investors are attracted to the opportunity of direct lending as it provides them with attractive yields and an expectation for resilient performance through various market conditions. The Principal Private Credit Fund I is tailored to meet the evolving needs of investors who prioritize significant income driven investment returns and diversification compared to other more typical investment options," said Tim Warrick, managing director of alternative credit at Principal Asset Management.

Principal Alternative Credit is a market leader in private credit with a heritage of serving clients for over 50 years. The team is comprised of more than 30 dedicated and experienced professionals averaging over 15 years of experience in direct lending and surpassed $2 billion in total borrower commitments as of December 31, 2023.

“With this offering, we have taken the proven approach of the Principal Alternative Credit team and offered it as an Interval Fund to meet the needs of our clients in the US Wealth Markets,” said Barbara Wenig, executive managing director, Principal Asset Management. Wenig chairs the Interval Fund Board and leads efforts to advance the offering of semi-liquid private assets to retail markets.

About Principal Asset ManagementSM

With public and private market capabilities across all asset classes, Principal Asset Management and its investment specialists look at asset management through a different lens, creating solutions to help deliver client investment objectives. By applying local insights with global perspectives, Principal Asset Management identifies distinct and compelling investment opportunities for more than 1,100 institutional clients in over 80 markets. Principal Asset Management is the global investment solutions business for Principal Financial Group® (Nasdaq: PFG), managing $545 billion in assets and recognized as a “Best Places to Work in Money Management” for 12 consecutive years.

News Release Contact

Investment solutions and asset management

Lauren Fraser, +44 (0) 20 7355 8832
Ashley Miller, 515-878-0507
Erin Parro, 515-878-0152

Footnotes

Experience includes investment management activities of predecessor firms beginning with the investment department of Principal Life
Insurance Company. Pensions & Investments, “The Best Places to Work in Money Management”, among companies with 1,000 or more employees, December 12 2023.

Principal Private Credit Fund I is a closed-end investment company that continuously offers its shares. Investors in a closed-end fund do not have the right to redeem their shares on a daily basis at a price based on NAV per share. There is no secondary market for the Shares, and the Fund does not expect a secondary market will develop. You may not be able to sell your Shares when and/or in the amount that you desire.

The Fund is structured as an interval fund, which means it conducts quarterly repurchase offers of no less than 5% of the Fund’s outstanding shares at net asset value (“NAV”). Investors should not rely on any expectation of repurchase offers being made in excess of 5%.

Investors should consider the Fund’s shares illiquid. The ability of investors to sell shares to access their invested capital is very limited.

Investment Risks: Investing in the Fund is speculative and involves a high degree of risk, including the risks associated with leverage and the risk of a substantial loss of investment. The Fund invests in loans, either through primary issuances or in secondary transactions. The value of the loans may be detrimentally affected if a borrower defaults on its obligations. There can be no assurance that any collateral associated with a loan will retain its value. If interest rates rise, default risks may increase, as issuers may be unable to pay escalating interest amounts. Holdings may be deemed illiquid, and the Fund may be unable to sell particular securities at an advantageous price. Investing in derivatives entails specific risks relating to liquidity, leverage, and credit, which may reduce returns and/or increase volatility.

The Fund is non-diversified, so it may invest a high percentage of its assets in the securities of a small number of issuers and is more likely than diversified funds to be significantly affected by a specific security's poor performance. Due to the inherent uncertainty and subjectivity of determining the fair value of investments that do not have a readily available market value, the fair value of the Fund’s private investments may differ significantly from the values that would have been used had a readily available market value existed and may differ materially from the amounts the Fund may realize on any disposition of such investments. The Fund is new and has limited operating history.

Carefully consider a fund’s objectives, risks, charges, and expenses. Contact your financial professional or visit principalfunds.com for a prospectus, or summary prospectus if available, containing this and other information. Please read it carefully before investing.

Investing involves risk, including possible loss of principal.

Principal Private Credit Fund I is distributed by Principal Funds Distributor, Inc.

©2024 Principal Financial Services, Inc., Principal®, Principal Financial Group®, Principal Asset Management, and Principal and the logomark design are registered trademarks and service marks of Principal Financial Services, Inc., a Principal Financial Group company, in various countries around the world and may be used only with the permission of Principal Financial Services, Inc. Principal Asset Management℠ is a trade name of Principal Global Investors, LLC.