Growing interest in private debt as an asset class by investors seeking uncorrelated yield has led to the launch of additional share classes.
LONDON 7 August 2019: Prestige Funds is launching two new distribution share classes for its Commercial Finance Opportunities Fund (“CFO”), a Luxembourg based, open-ended SICAV that launched in 2013.
CFO is a direct lending fund that focuses on invoice, asset and commercial finance opportunities, primarily in the UK, and operates a highly diversified investment portfolio of short term commercial and industrial loans.
The new share classes are:
• Distribution ID share classes which are aimed at institutional investors with a minimum investment of USD 1,000,000 (or currency equivalent) and quarterly liquidity (on 90 days’ notice).
• Distribution D share classes which are aimed at advisory investors with a minimum investment of USD 100,000 (or currency equivalent) and quarterly liquidity (on 30 days’ notice).
The launch of these new share classes was prompted by increased investor interest in the CFO strategy from both institutional and advisory clients globally. The new share classes will help to generate more liquidity for investors’ portfolios and be similar to a bond coupon or equity dividend.
Commercial Finance Opportunities was launched in 2013 but since then has grown to almost USD 200 million in assets under management. During that period the Fund has generated an average annualised USD return of 7.35%.
Commercial Finance Opportunities produces returns which are not correlated to bond or equity markets by lending to small businesses looking to scale up their business without usually having to give away equity. It provides a vital source of commercial funding for companies and supports important job creation at a time when many commercial banks are withdrawing from SME lending.
Commercial Finance Opportunities lends to businesses via a specialist commercial loan originator (Finance Arranger) that has lent more than GBP1.1 billon / USD 1.4 billion to more than 5000 small and medium size companies since 2011; demonstrating the relative short-term nature of the portfolio.
During H1/2018, Commercial Finance Opportunities listed on Euronext Dublin making it more attractive and accessible to a wider range of international, institutional investors. Since then, its assets under management have almost doubled. The Fund operates with an annual management fee of 1.50% and has no performance fee.
Craig Reeves, founder of Prestige, commented: “Investor appetite for private lending strategies has been growing steadily over the last few years as government bond yields have descended into negative territory. With no sign of this trend reversing in the near future, more investors have been investigating private debt funds as an alternative.”
Prestige is on course to host a record number of site visits by investors to its London and Cambridge based finance operations this year, as well as fulfilling the highest volume of loans to the largest number of customers in its operating history.
The Macro Environment - SMEs
UK SME demand for finance continues to grow at a time when some high street banks have been leaving the market to focus on other areas of lending. In 2017 alone asset financing channeled GBP 18.6 billion into the SME sector, along with more than GBP 9 billion from invoice financing.
Many SMEs lack the conventional security needed to access bank loans or simply don’t ‘fit the profile’ for larger banks. Much of this deal flow is also being passed onto asset finance specialists by banks that are not prepared to onboard non-standard SME loans. This is creating a steady source of business for private lending entities.
Since the financial crisis of 2008 new company start up activity in the UK has passed the 400,000 market, according to data from UK Finance. This is higher than forecast prior to the financial crisis and represents a sustained upturn in entrepreneurial activity in the country.
Invoice finance, property finance and asset finance are valuable sources of funding for UK SMEs, helping to make their cash flow more predictable and avoiding the need to enter into lending relationships which could be detrimental to the long-term growth prospects.
According to UK Finance, even factoring in the impact of Brexit (the vast majority of UK SMEs have little to no exposure to the EU), gross new supply of lending finance to UK SMEs is projected to continue to grow to between GBP 119 billion and GBP 145 billion by 2024/25. It is anticipated that non-bank lending will constitute most of this growth.
SOURCE: UK Finance, Responsible Finance and the Bank of England
The Macro Environment - Population growth
With rising costs across almost all industrial and commercial sectors, and a rising population, there is an increasing demand to finance scale, efficiency and productivity.
Over the last century, the global population has quadrupled. In 1915, there were 1.8 billion people in the world. Today, according to the most recent estimate by the UN, there are 7.3 billion people - and we may reach 9.7 billion by 2050.
With approximately 64 million people in the UK (of whom approximately 8m were born overseas), and with 5.7 million SMEs operating with the lowest unemployment in almost 45 years, we believe this represents a significant opportunity for investors to finance scale and growth opportunities.
The Macro Environment - Our investors
Negative Interest Rates / Low Bond Yields have created many “richly priced” equity markets. CONSIDER: Private Debt
These remain interesting times for both financial markets and financial advisors. Prestige, via specialist companies, operates several interesting non-market based, alternative investment opportunities that continue to produce positive results with a low correlation to traditional fixed income and equity based markets.
The nature of our direct lending businesses is specialist; Prestige Funds are niche, experienced investor strategies that can sit at the periphery of any portfolio. However, since there remains a significant number of sovereign and corporate bond yields and interest rates operating with near zero throughout Europe and elsewhere while at the same time many equity markets look “richly priced”, there is perhaps now more than at any time in recent history a requirement to provide investors with a genuine alternative inflation hedge in an increasingly uncertain and volatile world.
Alternative Lending & Private Debt has become a genuine asset class
As interest rates have risen in the USA and elsewhere there is increasing pressure on bond prices as well as rising volatility in many equity markets. Investor interest in the direct lending / private debt space continues to increase especially since access to credit from traditional lenders for many small businesses has yet to recover to pre-2008 financial crisis levels. We are seeing an increasing number of Independent Asset Managers, Family Offices and Pension Funds allocating to this area.
Hawksmoor Partners, London
T: +44 (0) 7793 882 230
Founded in 2007, Prestige consists of several companies under common ownership and control. The objective of this enterprise is to provide professional, innovative financial products and services to a diverse international client base and to deliver consistent, positive investment returns.
Prestige is also committed to continuously improving all areas of its business while empowering and developing its diverse team of professionals - many of whom come from senior positions within banking, finance and investment management.
The key strengths of Prestige are People, Processes and Systems
Prestige was established just months before the largest ever global financial crisis which continues to significantly shape many aspects of our world today in economic, political and social terms.
Since then, and against many odds, Prestige has successfully launched several businesses and innovative financial products and services that now includes a team of over 100 professionals in the UK and several international financial centres as well as raising over USD 1.9 billion. It is testament to the hard work of its various teams, the systems and processes used, and the products and services created that the Prestige business continues to grow and evolve.
Established in 2007, Prestige Asset Management Limited is a UK-based administration and marketing company authorised and regulated by the Financial Conduct Authority (FCA) (No: 486239) and is a member of the Alternative Investment Management Association (AIMA) and the Chartered Institute for Securities and Investment (CISI). Prestige Asset Management Limited is entirely privately owned by its senior management. The company specialises in providing investment administration and marketing support services to international fund managers, wealth managers, asset managers, financial advisors and financial intermediaries.
Established in 2009, Prestige Fund Management Limited is a Cayman based Fund Management company registered with the Cayman Islands Monetary Authority (CIMA) and is entirely privately owned by its senior management. The company specialises in international alternative investments with a focus on absolute return, actively managed strategies and is responsible for the management and operation of several investment funds. Prestige Fund Management Limited is registered with the Cayman Islands Monetary Authority (CIMA).
Established in 2011, Prestige Capital Management Limited is a Malta-based investment management company regulated by the Malta Financial Services Authority (MFSA) and is entirely privately owned by its senior management. The company specialises in international alternative investments with a focus on absolute return, actively managed strategies and is responsible for the management and operation of several European-domiciled investment funds. Prestige Capital Management Limited is authorised and regulated by the Malta Financial Services Authority (MFSA) and is a member of the Malta Funds Industry Association (MFIA). Prestige Capital Management Limited is a full scope AIFM and is authorised as such in accordance with the Alternative Investment Fund Managers Directive (AIFMD).
NOTE: This Press Release is issued by Prestige Asset Management Limited (PAML) which is authorised and regulated in the UK by the Financial Conduct Authority (FCA) and is for information purposes only. This document does not constitute an offer to sell or a solicitation of an offer to buy shares in any Prestige Fund/s and is only intended for distribution to persons permitted to receive it by Section 238 of the Financial Services and Markets Act 2000 (FSMA). It is not intended for retail investors. If you are unsure of your classification, you should seek independent professional advice. This Press Release contains information covering a Fund registered in Luxembourg, therefore not subject to UK FCA authorisation and regulation or UK investor protection and compensation schemes. Secured Growth Finance Opportunities is a Luxembourg (SICAV-SIF), also known as Commercial Finance Opportunities (CFO Fund) which is an Alternative Investment Fund under the Alternative Investment Fund Management Directive (AIFMD). CFO is managed by Prestige Capital Management Limited (PCM) which is a full scope AIFM authorised and regulated by the Malta Financial Services Authority (MFSA) and is subject to the full requirements of the AIFMD. CFO is an experienced investor fund, and potential investors should seek professional independent financial advice prior to making any decision to invest. It is also a collective investment scheme as defined by the Commission de Surveillance du Secteur Financier (CSSF) and is licensed to carry out the activities of a collective investment scheme in the form of a Professional Investor Fund targeting respective eligible investors. In the UK such funds are Unregulated Collective Investment Scheme (UCIS) / Non Mainstream Pooled Investments (NMPI) and are higher risk and not suitable for all types of investor (Retail). There may be restrictions when marketing to certain jurisdictions. It is your responsibility to be informed and to observe all applicable laws and regulations of any relevant jurisdiction and to satisfy yourself that your use of this information and any subsequent investment in the fund is permissible under the applicable laws, rules and regulations of any applicable government, governmental agency or regulatory organisation where you reside. Trading of Secured Growth Finance Opportunities (SICAV-SIF) - Commercial Finance Opportunities (Fund) began in 11/2013 and results prior to that reflect Methexis Finance Opportunities Secured Loan / CFO in GBP. Trading of CFO D-Class and ID-Class commenced 06/2019. Any results shown prior to this are a composite proforma based upon actual lending data provided by the Underlying Investment Advisor/s and should not be relied upon for any investment decisions. Past, future and simulated performance is no guide to future results - investments can go down as well as up and you may get back less than your original investment. Any track record/s and performance data shown is based on the actual lending results published by underlying Investment Advisor/s within the Fund, which were in existence at the time of creation but should not be relied upon when making a decision to invest. Please note that the fund described within this factsheet is not for sale in the United States of America, its territories and possessions, or available for distribution to or investment by US investors. If you are uncertain with regards to your eligibility, please seek independent professional advice. Investment allocation scenarios shown are for example only and are subject to change and may vary. Further information on facts, figures and literature contained within the document is available upon request. Subscription for shares in any Prestige Fund or investment portfolio can only be made by completing the relevant application form that accompanies the Fund’s Issuing Document or Offering Memorandum / Offering Supplement. Any comparisons between different funds have been made on a Net Asset Value (NAV) basis, whereas any comparisons with an index have been made on an offer-to-offer basis which the Prestige Fund directors believe is fair and not misleading. Comparative data has been obtained from reliable sources. Any comments, views and opinions expressed in any Investment Advisors Summary within this document reflect those of the underlying Investment Advisor/s and may not be the current views, comments and opinions of PAML and/or its affiliates. All trademarks are recognised. The MSCI World Index is a registered trademark of Morgan Stanley Capital International. The S&P500 Index is a registered trademark of Standard & Poor’s Group. The US S&P Treasury Bond Index is made up of actual monthly bond yields and turned into a monthly index. The returns of the index are representative of what could be achieved if one held that bond during that particular time period. Neither PAML, the Fund Manager nor the Fund’s Administrator accept any liability from investors who rely upon any other information with regard to any Prestige Fund/s.
The Representative of the Fund/s in Switzerland is OpenFunds Investment Services AG, with its registered office at Seefeldstrasse 35, CH-8008, Zurich, T: +41 44 500 31 08, www.open-funds.ch. The Paying Agent in Switzerland is Società Bancaria Ticinese SA, Piazza Collegiata 3, CH-6501, Bellinzona, T: +41 91 821 51 21, F: +41 91 825 66 18, www.bancaria.ch. The distribution of Shares in the Fund in Switzerland must be made exclusively to Qualified Investors. The place of performance and jurisdiction for the Shares in the Fund distributed in Switzerland is at the registered office of the Representative. Publications in respect of the Shares are effected on the electronic platform www.fundinfo.com. The disclaimer on OpenFunds acting as Swiss legal representative has been drawn up in the English language. In case of any discrepancy between the English text version and any translation thereof, the English version shall prevail and be regarded as binding. Unless advised otherwise, all sources of data are those of Prestige. © 2019
Press release distributed by PressHalo on behalf of Prestige Asset Management, on 7th August, 2019.