Sixth Street has raised €3.75bn for its latest European direct lending fund, underscoring the continued expansion of private credit as an alternative to bank-led financing across the region.

The San Francisco-based private capital manager hit the hard cap on Sixth Street Specialty Lending Europe III, nearly four times the roughly €1bn raised for its previous fund. With anticipated leverage, the vehicle will have around €7bn of total firepower.

The fundraising follows Sixth Street’s expansion of its European presence, including a move into a new London office last year. The firm said rising deal activity and financing needs are driving demand for non-bank capital, particularly for complex or cross-border transactions.

Michael Griffin, co-head of Sixth Street’s global direct lending franchise, said the platform can now provide financing ranging from €30m to more than €2bn by drawing on capital from its flagship $30bn TAO platform. “Our job is to find those sectors and deals that need more thoughtfulness and creativity,” Griffin said.

Since 2015, Sixth Street’s European direct lending team has completed more than 75 transactions across the UK and continental Europe and now employs about 75 people in the region. The firm manages more than $125bn of assets globally.

The raise highlights intensifying competition in Europe’s private credit market as direct lenders increasingly step into transactions once dominated by banks.

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