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Direct lending strategy pulls in $100m from IIs

As bond yields fall, UK-based alternative investment firm Prestige Fund Management said it has sourced an additional $100m in institutional investor commitments for its direct lending strategy.
Fund Selector Asia

The sources of new commitments mainly came from outside the UK, such as Middle East sovereign wealth funds, Swiss foundations and Swiss corporate pension schemes, according to a statement form the firm.

Prestige has two asset-based direct lending strategies: alternative finance and commercial finance. In total, the strategy has raised around $1.3bn, according to the statement.

Small business loans

Prestige’s direct lending fund provides non-commoditised loans to small UK businesses. It has made 16,000 such transactions over the past 15 years, Craig Reeves, the firm’s founder, said in a previous FSA interview.

Direct lending is not a passive investment, Reeves said.

“In terms of specifically what the alpha is, it’s direct lending: loans, leases, purchase agreements, or generically, we call them `finance agreements.'”

The firm specialises in loans to small businesses in agricultural-related sectors, such as alternative energy and bio-mass projects. Its activities help sustain and grow the UK rural economy, according to the statement.

According to the fund factsheet, the alternative finance fund, available for sale in Singapore, has a target capital appreciation of 6-7% per annum and an annualised volatility of 1%.

Prestige’s investors include corporations, insurance firms, and pension funds, as well as discretionary investment advisors and private banks, according to a separate document from the firm.

“The world is facing the prospect of increasing interest rates, more market volatility and future political uncertainty,” Reeves said in the statement. “In this environment, institutional investors must still grapple with falling corporate and sovereign bond yields.”

The three-year performance to end-2016 of the Prestige Alternative Finance fund versus its sector.

Part of the Mark Allen Group.