Sixth Street has held a final close of its third European direct lending fund at EUR 3.75 billion in equity commitments, reaching the vehicle's hard cap. Sixth Street Specialty Lending Europe III represents the firm's largest dedicated European direct lending strategy to date.

The total investable capital for SLE III is expected to be approximately EUR 7 billion when including anticipated leverage facilities. The fund will continue the firm's strategy of providing flexible capital solutions to companies across the United Kingdom and continental Europe, with transaction sizes ranging from EUR 30 million to over EUR 2 billion.

Since launching its European direct lending platform in 2015, Sixth Street has completed more than 75 transactions throughout the UK and Europe. The firm has established itself as a provider of bespoke financing solutions for complex situations, including sponsored and non-sponsored transactions, corporate carve-outs, and special situations.

The successful fundraise comes amid a record year for European private credit. Fundraising in the region hit EUR 56 billion through the first nine months of 2025, a 17% increase over the prior year's full-year total. European-focused funds accounted for 35% of global private debt capital raised during that period, up from roughly 24% in each of the two preceding years.

For institutional investors, the fund's strong close reflects continued confidence in European direct lending as a distinct opportunity set from the more mature US market. European private debt managers have been able to command a spread premium of 25-50 basis points over US equivalents, according to market participants, driven by the smaller and more fragmented nature of the European market.

The fund will deploy capital into a market where bank retrenchment continues to create opportunities for alternative lenders. As Basel IV implementation progresses across Europe, the shift away from traditional bank lending toward private credit is expected to accelerate further in the coming years.