Jefferies Credit Partners is raising roughly €1 billion for a new private credit secondaries fund, the investment bank's first dedicated vehicle for acquiring distressed or mispriced loan portfolios in the European and North American direct lending markets. The fund will split capital between outright loan portfolio acquisitions and fresh origination tied to those secondaries transactions, according to people familiar with the raise. First close is expected in Q2 2025.

The timing is deliberate. Private credit fundraising slowed 23 percent year-over-year in 2024, while secondary transaction volume in the asset class climbed to $18 billion, nearly triple the 2022 figure. Jefferies is betting that mounting redemption pressure at older vintages — particularly 2020-2021 funds now facing valuation writedowns — will force portfolio sales at discounts wide enough to justify dedicated capital. The firm already runs $9 billion in credit strategies across distressed debt and structured products, but this marks its first pure-play secondaries effort in private credit.

The move matters because it signals bifurcation in the private credit stack. As rates stayed elevated through 2024, covenant-lite loans originated at SOFR plus 550 in 2021 are now clearing secondaries at 72-78 cents on the dollar, creating arbitrage for buyers with patient capital and restructuring expertise. Jefferies is positioning the fund as a hybrid: acquire portfolios at a discount, renegotiate terms with borrowers, and selectively underwrite new loans to those same companies at today's SOFR plus 725-800 spreads. That dual mandate distinguishes it from pure secondary buyers like Coller Capital or Lexington Partners, who typically avoid fresh deployment into acquired assets.

The €1 billion target also reveals confidence that European allocators — particularly German and Dutch pension systems — will treat private credit secondaries as a separate sleeve from primary commitments. Jefferies has already secured anchor interest from two unnamed European institutional investors, each committing north of €150 million. If the fund closes at target, it will rank among the fifteen largest private credit secondaries vehicles ever raised, though still well behind Blackstone's $4.6 billion Strategic Partners fund from 2023.

Operators should track three developments over the next six months. First, whether Jefferies can demonstrate 12-15 percent net IRRs on early portfolio acquisitions, the threshold required to justify management fees on a secondaries strategy. Second, how aggressively the firm competes with Ares, Apollo, and Blue Owl — all of whom have launched similar vehicles in the past eighteen months. Third, whether the fund's hybrid origination mandate attracts regulatory scrutiny in Europe, where BaFin has signaled unease about managers holding both distressed and performing loans to the same borrower.

Jefferies has not disclosed target returns, but comparable funds are underwriting to 14-17 percent gross IRRs with 2.5x-3.0x gross multiples over seven-year hold periods. The firm's existing credit franchise gives it distribution reach — Jefferies originated $12 billion in syndicated loans in 2024 — but secondaries require different skill sets, particularly around legal transfer mechanics and borrower consent waivers. First-close commitments are due April 30, 2025, with final close targeted for September.