Much is written about the retreat of banks creating space for direct lenders and, while that is certainly an important trend, there are also increasing examples of banks themselves having a role to play in the direct lending space. One recent example is Rabobank-backed Colesco.
Rabobank is a co-operative bank with a 125-year history in the Netherlands, focused on sustainability. Danny Vroegop has held numerous roles at the bank, most recently global head of acquisition finance and sponsor coverage. He is now co-founder and chief investment officer at Colesco, a new sustainability-focused direct lender.
Vroegop tells affiliate title Private Debt Investor he thinks the Colesco portfolio will include many assets based in the Benelux region, but the firm is prepared to do deals across Europe. It will focus on providing senior secured debt (including unitranche) and subordinated debt for borrowers with EBITDA of between €10 million and €100 million. Vroegop estimates around 80 percent of loans will be in support of private equity sponsors, and the rest in support of family-owned businesses.
Crucially – not surprisingly, given its roots – Colesco will focus on sustainability, particularly on energy transition, sustainable food and an inclusive society. “We want to direct more capital to the things that we know and love and where borrowers may need us if other sources of capital like the bank club loan market are not there at the important moments,” says Vroegop.
Vroegop says Colesco is independently managed and has its own investment committee – which he chairs – and that the bank has no say in its running. However, Colesco has access to the bank’s rating methodologies, IT platform and its research on relevant industry verticals. “There’s a huge number of things we can use to our benefit so, despite the fact we’re small at this point, we have a big support machine that can help us as and when we need it.”
There’s only so much Vroegop can say about fundraising but, while he acknowledges 2023 has been a difficult year, he says the firm has accumulated enough capital to launch its platform and start doing deals. It is now primarily targeting the 2024 allocations of institutional investors, as well as some large family offices. Some discussions, he says, are in relation to separately managed accounts.
Growing the team
Colesco has a core staff in place to get things up and running but is still adding new members
“We have a solid team now who can start running the business, but we also have an ambition to grow in the coming period,” Vroegop says.
“By growing the business, we can attract people from both within the bank as well as people we’ve worked with before, who are now elsewhere.”
The latest addition is Karin Pasha-Huizinga, who joined in October as a responsible investment officer. Previously a partner at Cardano Group, she will lead the implementation of the Responsible Investment Framework.