French boutique Axiom Alternative Investments (Axiom) has announced plans to launch a branch called Axiom European Financial Debt Fund Limited (AEFD).
The company will invest in a diversified portfolio of regulatory capital securities issued by European financial institutions.
AEFD will target an issue in excess of £100m (€138.2m) by means of a placing of ordinary shares to institutional and sophisticated investors.
It will seek admission of its shares to trading on the specialist fund market of the London Stock Exchange. This admission is expected to occur in mid-October 2015.
The firm will be structured as a closed-ended investment company incorporated in Guernsey, with a continuation vote after seven years.
As investment manager of AEFD, Axiom will look for investment opportunities linked to the Basel III and Solvency II transitions in Europe.
AEFD will mainly focus on investing in the secondary market. However, instruments may also be subscribed in the primary market where Axiom identifies attractive opportunities.
Axiom has developed its focus on the subordinated debt market over the past six years. The firm has been managing a separate account using AEFD’s proposed strategy since 1 January 2015.
“As at 31 August 2015, this account had delivered gross returns of 12.91% per annum,” Axiom said.
AEFD will target a net total return on invested capital in excess of 10% per annum over a seven year period.
David Benamou (pictured), managing partner of Axiom, said: “The financial crisis resulted in a massive change in European financial regulation. Since then, the Basel III transition and ECB regular stress testing have led banks and other institutions to increase and improve their regulatory capital, presenting new and sizeable opportunities for investors in higher-yielding debt securities.
“Following the financial and political turmoil of the first half of this year, which caused uncertainty around any investments linked to the Eurozone, we now think the timing is perfect to launch AEFD, having also seen increased investor interest for AEFD’s unique and compelling offering.”
With over €550m of assets under management, Axiom Alternative Investments has offices in Paris and London.