Arch Financial Products, in a joint venture with cru Investment Management, has launched a finance fund to capitalise on the opportunities in corporate private finance arising from the
Arch Financial Products, in a joint venture with cru Investment Management, has launched a finance fund to capitalise on the opportunities in corporate private finance arising from the current investment climate.
The CF Arch cru Finance Fund will use exclusive access to private markets via a series of specialist investment companies that will invest in short to medium term private finance deals.
The fund will target annual returns of two per cent above the Bank of England base rate. It has a targeted annualised volatility of less than three per cent.
The restricted credit in public markets and the unwillingness of banks to lend has seen the number of private finance deals spiral in recent months.
Arch will capitalise on this by targeting absolute returns from a diverse range of private finance related investments. These will include specialised niche markets, with investment in asset based lending and senior-secured traded debt deals of between USD3m and USD10m.
Arch acts as investment managers to the fund, while cru has responsibility for its retail distribution.
The fund is modelled on Arch cru Private Finance IC, a listed investment company, whose share price has returned 23.5 per cent since launch (mid market price as at close 17 November).
It is designed to offer retail investors low risk exposure to private markets. The fund offers an alternative to fixed interest investment, and is a key diversifier within a retail portfolio.
The Financial Services Authority regulated fund is domiciled in the UK and is available in sterling. It has a minimum investment of £1,000
Robin Farrell, chief executive of Arch, says: ‘The credit crunch has battered the balance sheets of major banks and there is a severe shortage of cash among existing lenders. A number of sound businesses are in danger of collapsing without immediate credit, and there is huge demand for finance from the private sector. This environment makes it the ideal time to be investing in private finance deals, with which we can capture superior yields through highly predictable ‘control investing’.’
