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24 January 2018

Dillon Eustace advised Tennenbaum Capital Partners and DMS Governance on Launch of a Direct Lending Fund

Dillon Eustace are delighted to have advised  DMS Governance and Tennenbaum Capital Partners, LLC (“TCP”) on the launch of TCP DLF VIII ICAV ("ICAV"), a closed-ended, Irish collective asset-management vehicle authorised by the Central Bank of Ireland as a loan origination qualifying investor alternative investment fund (“L-QIAIF”).

The ICAV’s investment objective is to achieve attractive risk-adjusted returns produced primarily from current income generated by investing in performing senior secured debt issued by U.S.-based middle-market companies. The ICAV represented a substantial portion of TCP’s $1.9 billion Direct Lending Fund VIII fundraise.

L-QIAIFs are subject to specific requirements as laid out by the Central Bank of Ireland. These rules were updated in January 2017 extending the flexibility of the L-QIAIF. The Central Bank of Ireland requires that L-QIAIFs have in place a number of procedures, policies, and processes including collateral management and credit monitoring, which DMS can prepare and monitor on an ongoing basis through its independent risk management capability. By reason of DMS acting as alternative investment fund manager to the ICAV operating under the Alternative Investment Fund Managers Directive (“AIFMD”), the L-QIAIF use the AIFMD marketing passport.

Lee R. Landrum, Managing Partner at TCP noted, “Our objective at TCP is to deliver attractive risk-adjusted returns for global investors across our firm’s strategies. We are pleased to have worked with high-quality service providers such as DMS and Dillon Eustace to structure an effective and efficient vehicle to accommodate the needs of our U.S. and non-U.S. institutional investors. We also appreciate their timely and helpful coordination with the Central Bank of Ireland. The ICAV met the needs of a substantial portion of our investor base quite effectively.”

Etain de Valera, Partner at Dillon Eustace stated, “We are proud to have been selected by TCP, who are working with DMS to advise them on legal and regulatory issues, to help them establish their first L-QIAIF in Ireland. We have been able to capitalize on our extensive experience in advising fund managers, in particular those employing credit strategies, to assist in bringing this product to market. Having worked with TCP and DMS in establishing one of the few L-QIAIFs in Ireland which have now launched, we believe that the stage is now firmly set for Dillon Eustace to assist other managers in establishing similar funds employing similar strategies. This product represents a definite advantage for asset managers looking to market their loan origination strategy both inside and outside the EU, particularly in the context of uncertainty around Brexit.”

Conor MacGuinness, Managing Director at DMS commented, “As our AIFM Management Company services and particularly direct lending strategies continue to grow, it has been exciting to launch one of the first L-QIAIFs in Ireland, which is another achievement and testament to the confidence investment managers have in DMS. We see a continued interest in this type of structure and welcome TCP as a client.”