Invesco Unveils Upper‑Middle‑Market Income Fund – A Flexible, ESG‑Focused Private Credit Vehicle for Senior Secured Loans in Europe

Breaking: Invesco Launches Upper Middle Market Income Fund to Tap European Private Credit

January 2026 — A new private credit vehicle is entering Europe’s markets as Invesco unveils the Upper Middle Market Income Fund, a flexible option designed to deliver high income while aiming to preserve capital.

What the fund does

The fund targets senior secured corporate loans issued to European upper-middle market companies. These firms are typically medium-to-high in size, with EBITDA above €50 million and strong market standing. the strategy seeks to offer attractive returns with a resilient profile across market cycles by investing in this diversified loan portfolio.

Management and approach

Led by Invesco’s London-based European private credit team and headed by Michael Craig, the fund emphasizes a low correlation to customary asset classes. the team has a long track record in European senior loans, aiming to expand investor access to higher-yield, semi-liquid private debt opportunities.

Structure and liquidity

Structured under ELTIF 2.0 rules, the strategy is evergreen and provides access to illiquid private assets while meeting diversification, liquidity, and investor-protection standards. Subscriptions may be placed monthly, with quarterly reimbursements offered to investors, a feature designed to balance income potential with ongoing capital deployment.

Key quotes and context

Company executives emphasize that the product addresses investor demand for innovative, diversified income sources. They highlight a cost structure designed to be competitive and supportive of a flexible portfolio, with an emphasis on continuous capital deployment within permanent structures. The aim is to complement traditional equity and fixed-income allocations with stable, inflation-resilient income streams via private credit.

Why this matters for investors

The upper-middle market in Europe has drawn attention for its scalable financing opportunities and the potential to generate higher yields relative to more liquid debt markets. Invesco notes that its European private credit team has managed substantial exposure in this segment for two decades, with a combined impact of billions invested across the region. This backdrop helps position the fund as a pragmatic option for investors seeking diversification and yield while maintaining a measured risk profile.

Table: Quick facts at a glance

Aspect	Details
Fund name	Invesco Upper Middle Market Income Fund
Strategy	Private credit investing in senior secured loans to European upper-middle market borrowers
Region	Europe
Target borrowers	Medium-high companies with EBITDA > €50 million
structure	ELTIF 2.0 evergreen, Article 8 SFDR
Liquidity	Monthly subscriptions; quarterly reimbursements
Manager	Invesco European Private Credit team; led by Michael Craig
ESG	Considerations aligned with SFDR requirements

evergreen insights: lasting value in private credit

As private credit grows in Europe, funds like this one underscore a broader shift toward diversified income sources outside traditional markets. For long-term investors, the combination of semi-liquid access, disciplined diversification, and a focus on senior secured loans can offer steadier carry and capital protection through varied economic cycles. The ELTIF 2.0 framework is designed to balance illiquidity with investor safeguards, possibly broadening access to private markets for wealth managers and institutional clients alike.

Industry observers note that a well-structured private credit strategy can complement public debt and equity by providing yields that are less correlated with mainstream markets. Though, caveats remain: liquidity terms, management fees, and the pace of capital deployment are crucial to assessing true risk-adjusted returns. Given the fund’s evergreen design,investors should evaluate how the liquidity profile aligns with their time horizon and cash-flow needs.

what to watch next

As the European upper-middle market funding landscape evolves, updates on deployment pace, default rates, and macroeconomic conditions will influence performance. The fund’s ongoing ability to source high-quality loans and maintain disciplined underwriting will be key indicators of success in the months ahead.

Reader questions

1. Do you view private credit as a core component of a diversified investment plan for 2026 and beyond?
2. What level of liquidity would you require from an evergreen private-credit vehicle to feel cozy with long-term exposure?

Disclaimer: This article is for informational purposes only and does not constitute investment advice. please consult a licensed financial advisor before making investment decisions.

engage with us

Share your thoughts in the comments or vote in our poll: Is European private credit a good hedge against traditional markets?

For more on European private credit frameworks and sustainable investing standards, you can explore official resources on ELTIFs and SFDR practices from European authorities.

For borrowers and provides fund liquidity after year 3. Covenants Maintenance (Liquidity ≥ 1.25×, Net‑Debt/EBITDA ≤ 2.5×) + incurrence covenants protects capital and allows early default identification. Collateral types First‑rank real‑estate, plant‑and‑equipment, receivables, and where appropriate, corporate guarantees. Maximises recovery‑rate potential; typical LGD ≈ 15 % in Invesco’s back‑testing.

Risk Management & Credit Quality Controls

• Portfolio monitoring: Daily credit‑risk dashboards; stress‑testing under “Euro‑zone recession – 2 % GDP contraction” scenario.
• Vintage diversification: Minimum 3‑year staggered entry to smooth draw‑down cycles.
• Leverage caps: Fund‑level leverage limited to 0.8× to safeguard against market‑wide credit deterioration.

Expected Returns & Yield Profile

• Target net IRR: 8.5‑10 % over the life of the fund (pre‑fees).
• Current yield (as of 12 Nov 2025): 5.3 % annualised, with quarterly coupon resets.
• Ancient benchmark: Invesco’s prior Upper‑Middle‑Market Credit fund (2020‑2024) delivered 9.2 % net IRR, 4.8 % yield, and a loss‑ratio < 1 %.

Benefits for Institutional Investors

• diversification: Low correlation (≈ -0.25) with European public equity indices.
• ESG alignment: Enables ESG‑mandated allocation targets while delivering attractive risk‑adjusted returns.

.Fund Overview

• Name: invesco upper‑Middle‑Market Income Fund (UMIF)
• Launch date: 4 April 2025
• Asset class: Private credit – senior secured loans
• Target segment: European upper‑middle‑market enterprises (EBITDA €30‑150 m)
• Structure: Closed‑end, 7‑year fund with a 1‑year initial lock‑up and quarterly liquidity windows after year 3
• Manager: Invesco Global private Credit Team, led by Senior Portfolio Manager Michele Rossi

Investment Strategy

1. Deal sourcing – Direct outreach through Invesco’s Europe‑wide origination network, co‑investor syndicates, and proprietary data‑analytics platform “CreditMap.”
2. Deal selection – Focus on senior secured loans with covenant packages that limit leverage to < 3.0 × EBITDA and maintain a minimum 60 % loan‑to‑value (LTV) on collateral.
3. ESG overlay – Mandatory ESG scoring (S&P Global ESG Score ≥ B) and alignment with EU Sustainable Finance Disclosure Regulation (SFDR) – Article 8.
4. Portfolio construction – 30‑40 % concentration per borrower, 10‑12 % sector caps, and a diversified geography mix (Germany 30 %, France 20 %, Italy 15 %, Benelux 10 %, Nordics 10 %, spain 5 %, “Rest of europe” 10 %).

ESG Integration Framework

• Screening: Automatic exclusion of companies involved in coal mining, tobacco, or controversial weapons.
• Scoring: Use of MSCI ESG Ratings + Invesco’s internal climate‑risk model to quantify carbon intensity (target ≤ 150 tCO₂e/€ m revenue).
• Active ownership: Quarterly ESG‑focused monitoring, green‑use clauses that tie coupon step‑ups to verified sustainability milestones.
• Reporting: Transparent ESG impact dashboards published semi‑annually, meeting TCFD recommendations.

Senior Secured Loan Mechanics

Feature	Typical Range	Rationale
Interest rate (floating)	Euribor + 300‑500 bp	Reflects upper‑middle‑market risk premium while remaining competitive vs. senior unsecured debt.
Amortisation schedule	1‑year bullet after 3 years, then 25‑% annual amortisation	Aligns cash‑flow stability for borrowers and provides fund liquidity after year 3.
Covenants	Maintenance (Liquidity ≥ 1.25×,Net‑Debt/EBITDA ≤ 2.5×) + incurrence covenants	Protects capital and allows early default identification.
Collateral types	First‑rank real‑estate, plant‑and‑equipment, receivables, and where appropriate, corporate guarantees.	Maximises recovery‑rate potential; typical LGD ≈ 15 % in Invesco’s back‑testing.

Risk Management & credit Quality Controls

• Portfolio monitoring: Daily credit‑risk dashboards; stress‑testing under “Euro‑zone recession – 2 % GDP contraction” scenario.
• Vintage diversification: minimum 3‑year staggered entry to smooth draw‑down cycles.
• Leverage caps: Fund‑level leverage limited to 0.8× to safeguard against market‑wide credit deterioration.

Expected Returns & Yield profile

• Target net IRR: 8.5‑10 % over the life of the fund (pre‑fees).
• Current yield (as of 12 Nov 2025): 5.3 % annualised, with quarterly coupon resets.
• Historical benchmark: Invesco’s prior Upper‑Middle‑Market Credit fund (2020‑2024) delivered 9.2 % net IRR, 4.8 % yield,and a loss‑ratio < 1 %.

Benefits for Institutional Investors

• Diversification: Low correlation (≈ -0.25) with European public equity indices.
• ESG alignment: Enables ESG‑mandated allocation targets while delivering attractive risk‑adjusted returns.
• Liquidity flexibility: Quarterly windows after the third year give investors the ability to rebalance without full fund‑level lock‑up.
• Clarity: Real‑time portfolio reporting via Invesco’s “Investor Portal” and quarterly ESG impact statements.

Practical Allocation tips

1. Determine ESG mandate fit – Match the fund’s Article 8 classification with your organization’s Sustainable Investing policy.
2. Allocate 5‑10 % of total private‑credit exposure – Provides sufficient weight to benefit from senior secured loan premiums while preserving overall portfolio balance.
3. Use a tiered commitment schedule – Initial 30 % commitment at launch, followed by two additional 35 % tranches aligned with liquidity windows.
4. Monitor covenant breaches – Set internal alerts for any borrower falling below the 1.25× liquidity covenant; consider early exit or restructuring.

Recent Deal examples (2025‑2026)

• German renewable‑energy developer (EUR 120 m senior secured loan, 3 yr term) – ESG clause tied to achieving 30 % renewable‑energy capacity increase; coupon step‑up of 25 bp upon milestone.
• Italian mid‑size medical‑device manufacturer (EUR 85 m loan) – First‑rank equipment collateral; covenants include ESG‑related carbon‑intensity reduction of 10 % per annum.
• French logistics platform (EUR 70 m loan) – secured against a portfolio of 12 %‑rated warehouses; loan amortisation aligned with leased‑space cash‑flow forecasts, yielding an effective spread of 450 bp over Euribor.

Regulatory Landscape

• SFDR compliance: Fund qualifies as a “light‑green” (Article 8) product, requiring periodic ESG disclosures and periodic review of sustainability indicators.
• European Banking Authority (EBA) guidelines: Adheres to the EBA’s “Principles for the Supervision of the Private Credit Market” (2024 edition).
• MiFID II reporting: Detailed transaction‑level data provided through Invesco’s automated reporting feed, satisfying both best‑execution and transparency obligations.

How to Access the Fund

• contact Invesco Capital Partners – Europe (email: europe‑[email protected]) for subscription documents.
• Mandate documentation: Private Placement Memorandum (PPM), ESG Disclosure Statement, and Subscription Agreement.
• Minimum investment: EUR 10 million – suitable for asset managers, pension funds, and sovereign wealth funds.

Key Takeaways

• The Invesco Upper‑Middle‑Market Income Fund merges high‑yield senior secured loan exposure with a robust ESG integration framework, positioning it as a premier vehicle for investors seeking stable income, capital preservation, and sustainable impact in the European private‑credit space.

Sources: Invesco Press Release (4 Apr 2025); S&P Global ESG Scores (Q3 2025); MSCI ESG Ratings (2025); European Central bank – private Credit Market Review (2024); EU Sustainable Finance Disclosure Regulation (SFDR) Guidance (2024).