London-based alternative investment manager Omni Partners, has held the first close of its second secured lending fund, Omni Secured Lending Fund II (OSL II), with initial commitments of USD45 million.
OSL II is targeting a total fundraise of USD250 million by the time it holds its final close later this year.
The launch and initial close of the second vintage fund follows the success of Omni Secured Lending I (OSL I), which delivered a 10.4 per cent net return during its first 12 months of trading.
OSL I, which launched in February 2014, funded almost $50 million of lending across 92 loans before being placed into harvest in January 2015. OSL II will follow the same strategy as OSL I, providing direct exposure to short-term whole loans secured against UK residential and commercial properties. As with OSL I, OSL II will enforce strict lending requirements, included a maximum Loan-to-Value (LTV) of 70 per cent.
Taking advantage of tightened bank underwriting requirements, which have resulted in increased loan approval times and an emphasis on standardised lending, OSL II focuses on the short-term lending market (estimated at GBP3 billion annuall*) to deliver attractive risk-adjusted returns. It is here that alternative lenders receive interest rate premiums, whilst also being able to demand more security for faster execution.
Key to the operation of the strategy is Amicus Finance (Amicus), which serves as the fund’s origination platform and is responsible for the entire front-to-back loan process. Amicus was founded in 2009 with seeding from Steve Clark, founder of Omni, and subsequently integrated into Omni (as a subsidiary) in November 2013. The existing senior management team at Amicus collectively has over 100 years of experience in the property lending market.
Amicus has 27 employees and has delivered a solid six year track record, having underwritten more than 750 short-term loans with an aggregate value of more than $450 million since its inception. The firm prices for risk whilst underwriting, rather than forcing borrowers into standardised products charging fixed rates. All loans are asset-backed, thus minimising potential losses. Over the past six years, Amicus has suffered aggregate loss of principal given default of less than 0.1 per cent.
Omni’s Founder and Head of Risk, Steve Clark, says: “This second secured lending fund is the direct result of continued demand from investors for an unlevered high yield strategy that has the key characteristics of superior asset quality and short tenor. There are few niches of senior secured lending that provide a net yield in the double digits. The successful track record of Omni’s short-term secured lending strategy, combined with the institutional infrastructure put in place at Omni Partners over the last ten years, has proved attractive to institutional investors looking for risk-adjusted absolute returns. Given the success in the first round of capital raising, we anticipate closing the fund to new capital ahead of the 12-month timeframe that we had originally planned.”
