Carlyle Group Inc. plans to raise at least $8.5 billion for a new private credit fund, as it competes with rivals to snap up lending business abandoned by banks.

The Washington D.C.-based firm has held early discussions with investors about the new vehicle, dubbed Carlyle Credit Opportunities Fund III, ahead of its formal fundraising launch in 2023, according to people with knowledge of the matter, who requested anonymity because the information is private.

The new fund is part of Carlyle’s illiquid credit platform, which is overseen by Alexander Popov. It’s set to have a broad mandate, with the ability to invest in distressed and performing private debt, as well as special situations, said the people.

The alternative asset manager in April said it raised $4.6 billion for its second credit opportunities fund, with the aim to lend to private equity-backed companies, family-owned businesses and asset-based borrowers. At the time, the firm said roughly two-thirds of the fund’s investable capital had been committed.

A Carlyle spokesperson declined to comment.

The $1.4 trillion private credit market is increasingly becoming the only option for companies looking for debt financing in Europe and the United States. Investment banks have retreated from riskier lending, as inflation spikes and fears of an economic slowdown make it hard for them to offload tens of billions of dollars of debt already on their balance sheets. Private lenders are looking to fill the void, piling cash into everything from fresh buyouts to loan refinancings.

This article was provided by Bloomberg News.