Defense-focused private credit strategy of Sienna IM raises €270 million in initial funding round
Sienna Investment Managers (Sienna IM), a leading player in private credit, has announced the launch of a new strategy aimed at mobilizing funds for the European defense industry. The strategy, which aims to raise between €500m and €1bn by the end of 2026, is a testament to Sienna IM's commitment to financing mid-market companies.
Laurent Dubois, Managing Director and Chief Investment Officer (CIO) of Private Credit at Sienna IM, expressed his gratitude to investors for their trust in this innovative strategy. Dubois emphasized the importance of the mobilization of all financial players, including banks, alternative lenders, and equity investors, for the European defense industry.
The strategy includes an institutional fund, Sienna Hephaistos, and a closed-end fund for retail investors. Sienna Hephaistos will finance between 30 to 40 small- and mid-cap companies operating in the European defense sector. The loans are considered critical for the beneficiaries at both the early stage and for the execution of public orders, which are expected to grow strongly in the coming years.
Historically, Sienna IM has been committed to the financing of mid-market companies. This new strategy aligns with that commitment, focusing on the subcontracting chain of major defense industry groups. The funds will be used to finance working capital, capital expenditure, external growth operations, and bridging existing bank financing.
Sienna IM's senior secured debt fund aims to support the growth and development of European regions, a crucial aspect of sovereignty and reindustrialization. The surge in orders and increased financing needs among subcontractors to major defense industrial groups has necessitated this strategy, occurring against a backdrop of geopolitical upheaval that is altering the global balance of power.
Inflows into the fund will be managed by Sienna IM's French private credit team, with expertise from the Italian management team. Sienna IM has already secured more than €270m in commitments for its private credit strategy focused on European defense-related SMEs and mid-caps.
Recently, Sienna IM appointed a corporate private credit head for France and Italy to oversee the execution of this strategy. Dubois stated that the strategy is already being rolled out and will be offered extensively to retail investors.
This strategic move by Sienna IM underscores the growing importance of the European defense industry and the role of private credit in supporting its growth and development. As the industry continues to evolve in response to geopolitical changes, it is expected that strategies like this will become increasingly prevalent.
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