Natixis Seeks Partners for $1.5 Billion Private Credit Fund

France’s Natixis SA is in talks to set up a direct lending fund of around $1.5 billion, which would allow it to buy into the asset class, according to people familiar with the matter.

The French institution would manage the fund, aimed at opportunities such as direct loans to highly leveraged companies, allowing it to extend credit beyond its own balance sheet, according to people familiar with the matter who were not authorized to speak publicly. The fundraising effort is expected to wrap up in the coming months, they added.

A Natixis spokesperson declined to comment. The process is ongoing and details may change, the people said.

The fund comes as banks globally launch initiatives to ensure they are not left out of the booming $1.6 trillion private credit market. Some institutions, such as Citigroup Inc, have clinched tie-ups with large asset managers, while others have earmarked budgets to invest in direct loans on balance sheet.

Natixis’ move follows Sumitomo Mitsui Banking Corp.’s launch of a European private credit fund last year.

Until now, the French bank’s direct lending strategy has been based on its balance sheet, investing as much as $25 million tickets in companies that are likely to become borrowers in the leveraged loan markets later on, according to a report by Ducera Partners.