New York-based Grays Peak Capital (GPC) has launched its second private credit fund, targeting the North American government and defence ecosystem. Grays Peak Private Credit II will focus on short-duration, senior secured lending to government contractors.

The fund plans to deploy up to $500m annually in direct-lending exposure to middle-market companies and joint ventures operating in the defence and government sectors. Initial commitments have already been secured from previous investors and strategic asset managers.

Founder and CEO Scott Stevens said the fund is designed to bridge timing gaps in government contracting cash flows while offering differentiated private credit solutions supported by GPC’s technology-enabled platform and risk management framework.

The launch comes amid growing interest in private credit as a funding source for defence and government contractors, with firms increasingly looking for alternatives to traditional financing in a complex geopolitical environment.