Mandatum's new MAMCO II fund combines high current-income investments with pull-to-par investments that offer clear capital appreciation potential. The strategy invests across liquid and illiquid credit markets, focusing at any given time on the segment expected to offer the best relative return. It seeks to deploy capital throughout market cycles in both new issues and secondary markets.
Alexander Gallotti, Head of Leveraged Finance at Mandatum
MAMCO II has raised more than EUR 300 million in commitments in its initial closings and has already made its first investments. Its strong Nordic focus differentiates it from many competitors that emphasise other parts of Europe or the United States.
The fund invests primarily in European and Nordic fixed-income instruments, including both liquid, publicly traded instruments and illiquid loans. Approximately half of the investments are expected to be made in European or Nordic issuers of syndicated senior loans or high-yield debt securities. The remainder will be invested in illiquid corporate loans, such as direct lending transactions, where a company is financed by one lender or a small group of lenders rather than a large syndicate. The target allocation will nevertheless vary depending on the market environment.
“This combination is relatively unique. Our broad mandate and ability to operate flexibly across the credit market give us a better scope to make attractive investments. Market conditions can change, and at times one segment is more attractive than another,” says Alexander Gallotti, Head of Leveraged Finance at Mandatum.
The MAMCO II portfolio will comprise approximately 20 to 30 core investments. This provides sufficient diversification while making the portfolio more concentrated than broader credit strategies, which may hold as many as one hundred names. Diversification will be achieved across both individual issuers and sectors. The fund's target gross internal rate of return (IRR) is above 12 per cent per annum. This high return target is based on a combination of two return drivers: above-average coupons and the capital appreciation potential of a pull-to-par strategy, in which debt securities are purchased below par value.
“We look across the entire credit spectrum in Europe and the Nordics – whether it’s liquid markets such as high-yield bonds or syndicated loans, or illiquid direct lending. Regardless of the segment, we invest where we see the best risk-adjusted return opportunities at any given time.”
The fund's predecessor, MAMCO I, was established in 2020. MAMCO II follows a similar investment strategy, but its structure also allows larger institutions to participate. Its investor base is more international: the first vintage attracted capital from Finnish investors, whereas MAMCO II has also raised commitments from Sweden and Denmark.
Returns from the AI-driven sell-off
An opportunity to capitalise on the market dislocations targeted by MAMCO II's investment strategy arose in March 2026, when the prices of software companies' debt securities fell sharply.
“The fund's first closing coincided with a considerable market move that began in equities and subsequently spread to credit markets. Some market participants sold software companies' debt securities almost in panic, due to the perceived threat posed by artificial intelligence. In our view, the reaction was excessive for many companies.”
According to Gallotti, artificial intelligence presents risks but also offers considerable potential for certain technology and software companies, for example through improved operational efficiency.
“We analysed individual companies closely, considering the precise nature of the services they provide and the subsectors in which they operate. We concluded that many of them are, in fact, relatively resilient cash-generative businesses and are likely to benefit from the opportunities created by artificial intelligence. By May, some investments had already risen close to par value. We have also completed our first exits at returns clearly above the fund's average gross return target of 12 per cent IRR. The proceeds have already been reinvested in other opportunities,” Gallotti says.
Familiar companies and extensive networks
MAMCO II identifies investment opportunities through the companies it monitors. More than 200 companies are followed across the high-yield and syndicated loan markets, and Mandatum has already invested in them through its other strategies.
“We know these companies well and maintain a list of businesses that, in our view, can withstand different market conditions. We can select the companies that we currently consider the most attractive investments, potentially achieving a strong return without taking excessive company-specific risk, particularly during market dislocations. In company-specific situations, we may take on more credit risk, but this is always based on our assessment of the situation, the company's outlook and potential downside scenarios including recovery analyses.”
In the liquid segment, returns are driven by a combination of capital appreciation and coupon income. In the illiquid segment, investments are often made in financings related to new corporate transactions, where the return is mainly driven by higher than average coupons and some fees. Through Mandatum's private debt programme, the fund's extensive network includes more than 40 external private debt managers, as well as numerous other contacts among private equity investors and capital-market participants. This provides broad and timely access to investment opportunities. The fund's extensive sourcing channels and networks give it a distinctive position in the market, particularly in private debt and direct lending.
“Private equity investors know us and understand what we do. They also approach us with opportunities to participate in financing corporate transactions. Through our own contacts, we gain early visibility into developments in the illiquid private debt and direct lending markets. Strong networks also provide access to club financing arrangements and other special situations.”
Over the past ten years, sell-offs of varying magnitude have become more frequent in credit markets. Market-specific special situations have typically been triggered, for example, by geopolitical events. According to Gallotti, the next disruption will most likely be something no one yet anticipates.
“We are prepared. It is essential to have sufficient dry powder to take advantage of market movements,” he concludes.
MAMCO II
- A credit fund launched by Mandatum in early 2026 for professional investors
- Invests in both liquid and illiquid credit instruments in Europe and the Nordics
- Targets high risk-adjusted returns across varying market conditions
- Fundraising continues until the end of 2026
Marketing material.
This marketing communication relates to Mandatum Investment Fund SCSp SICAV RAIF and its sub-fund Mandatum Credit Opportunities II (the “Fund”). This document has been prepared by Mandatum Asset Management Ltd, which acts as the Fund's portfolio manager. The Fund is managed by Maples Fund Management Ireland Limited.
Past performance is not a guarantee of future returns. This marketing communication does not constitute investment advice. Investors should review the Fund documentation before making a final investment decision. The risks associated with the Fund are described in greater detail in the Fund documentation.