Hedge Funds

D. E. Shaw to carve out direct lending fund


D. E. Shaw is planning to give outside investors discrete access to its direct lending business by raising a new fund. Shaw has been running the strategy for about four years, thus far funding it solely through the $20.7 billion D. E. Shaw Composite Fund.

Shaw is raising assets specifically for the strategy, called D. E. Shaw Direct Capital Fund, to take advantage of the tough borrowing climate for small-cap and middle market companies - a climate that has led to wider credit spreads.

To match the less liquid nature of the fund's investments - senior, high-yield, mezzanine and