Abu Dhabi’s ADIA invests in private credit fund Cheyne Capital

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Cheyne Capital has secured investment from a subsidiary of Abu Dhabi’s biggest sovereign wealth fund for its European real estate debt fund, according to a joint statement on Tuesday, as appetite from GCC state investors for private credit booms.

The London-based hedge fund said the investment, from the Abu Dhabi Investment Authority’s (ADIA) unit, was for the ninth round of the Cheyne Real Estate Credit Holdings (CRECH) programme, also known as its Capital Solutions strategy, bringing ADIA’s total commitment to $831.3m (GBP650m).

The statement did not specify the size of the investment.

The Capital Solutions strategy is focused on senior lending against European real estate and includes subordinated debt, hybrid credit and commercial mortgage-backed securities (CMBS) services.

Cheyne has been an active lender in the residential real estate market, investing in student accommodation, affordable and senior housing projects.

A rise in global interest rates has hit commercial real estate valuations, creating a financing shortage for borrowers with maturing loans, as lenders require more capital to be injected before approving renewals of debt facilities.

The higher margins from these opportunities and have attracted money from Gulf sovereign investors.

ADIA, which manages the surpluses that Abu Dhabi earns from oil exports, is the largest among the three sovereign wealth funds in the emirate besides Mubadala and ADQ.

It said last year its private equity division would position for growth in private markets including in private credit, while Mubadala last month struck a $1bn deal with Goldman Sachs to go after private credit deals in Asia.

On Tuesday, the US bank’s unit Goldman Sachs Asset Management flagged it aims to expand its private credit portfolio to $300bn in five years from the current $130bn.

Read: Why GCC wealth funds are becoming engines of regional growth