A Canadian investment firm is raising $US500 million ($763 million) for a so-called specialty finance fund, the latest twist in the burgeoning private credit universe that has tempted Australian investors with double-digit returns.

Northleaf Capital Partners’ new fund invests third-party money into structured financings, which are backed by a pool of assets including musical royalties for artists such as Ed Sheeran, Madonna, Daddy Yankee, The Who and Jay-Z. The fund owns the royalties, and generates returns whenever their songs are played in films or via streaming services.