Rothschild's merchant banking arm has soft-closed its Five Arrows Credit Solutions (FACS) fund at €235 million ($419.6 million) after seeing strong inflows from family office, high net worth and global institutional clients.

The private debt fund is focused on the Western European middle-middle market and has a final closing target of €400 million. In a statement the blue-blooded bank said it has seen considerable appetite from Australian family office investors for the strategy.

FACS provides uni-tranche, mezzanine and other junior debt instruments to mid-market European companies. The fund hopes to capitalise on dislocated European credit markets and fill the financing gap currently faced by medium-sized corporates as banks and other providers reduce lending capacity for these borrowers.

In addition to supporting the private equity sector in buyout, expansion and recapitalisation transactions, the fund also lends directly to privately owned corporates to finance acquisitions and provide expansion capital. The fund is also looking at acquiring existing loans in the secondary market, exploiting discounts from distressed sellers.

Edouard Veber, former co-manager of JP Morgan's European mezzanine investment activities, and Martin Hook, a former partner at Indigo Capital, head up the fund at Rothschild.