Prestige Fund Management, the Cayman-domiciled specialist asset manager that focuses on lending to small and medium businesses in the UK, has launched a new bespoke share class for a Middle Eastern sovereign wealth fund.
The new mandate, from an un-named single group in the region, involves a minimum three year commitment to Prestige’s direct lending strategy. This dedicated (Participating IDS Shares) share class is not accessible to external investors, the company said in a statement announcing the mandate.
The allocation of the US$75m is structured via a dedicated share class that will pay a quarterly coupon of 1-2%, with the option to further increase their investment at a future date.
Craig Reeves, pictured left, founder and chief executive of Prestige Fund Management, said: “Lending strategies are gaining wider acceptance from institutional investors in the Middle East and elsewhere, because they have the potential to provide a consistent positive yield to larger investors who have long term liabilities they have to meet.
“We believe that asset-based lending in the UK is rapidly becoming mainstream, growing 22% last year, with £4.3bn of finance available in December alone. In addition with the introduction of the Bank Referral Scheme, the UK government now requires banks to pass to specialist lending platforms the details of small companies they are not able to support. As a result we feel that this sector will only continue to grow as the banks withdraw from lending to SMEs.”
Founded 10 years ago, Prestige has raised over US$1.3bn for its UK-focused asset-based lending funds. It specialises in lending to small and medium-sized companies in the rural sector, including project finance for alternative energy and other environmentally-friendly infrastructure projects.
‘Search for yield’
“Some investors have been seeing disappointing returns from funds investing in public markets during 2016, and negative yields from some mainstream debt markets,” said Reeves. “This has translated into a search for yield from other sources. In addition political uncertainty is fuelling a search for safe havens that can still provide a regular return.”
“Interest in asset-based direct lending from institutional investors has been growing rapidly in Q4. We hosted 15 institutional site visits during this time period and expect many more in 2017,” he said.
PFM is a Cayman-based investment management company that specialises in international alternative investments and is responsible for the management of several Cayman domiciled Open Ended Investment Companies (OEIC).