London-based private equity firm IW Capital has announced the closure of its first secured debt fund after it reached £2m from new high net-worth investors and its wider client base.
The Fund, which is the first in a series of diversified investment vehicles launched by IW Capital over the past few months, is currently invested in four transactions. The firm anticipates closing a fifth eligible transaction imminently, offering investors both risk diversity and an attractive yield.
According to the firm, this initiative is in direct response to the increased traction that its secured debt offering has gained in the market, and is further evidence of the support for UK SMEs.
The Fund will operate for three years, and thereafter there will be a 12-month run-off period. It will aim to pay investors a minimum return annual return of 7% and "if returns have exceeded this level at the end of the Fund's life, then any income or capital gains in excess of this target future will be returned to investors and IW Capital on a 50:50 basis," IW Capital said in a statement.
Presenting a sector agnostic approach, investors' funds are allocated across a diverse portfolio of loans supporting profitable and established businesses. All lending is secured by a mortgage debenture over the borrower's assets, and any wider security needs have been met based upon a case-by-case appraisal.
Consistent with the firm's approach to loan structuring, all loans include financial covenants and quarterly reporting obligations on the part of the borrower.
Luke Davis, CEO and founder of IW Capital said: "With the ongoing disintermediation of the UK alternative finance arena, we are seeing greater than ever demand from SMEs for more diversified funding options. IW Capital has championed this shift in the industry over the course of the last decade- first through equity and EIS, then with the launch of our debt arm and now with this secured fund."