Thu, 07/04/2016 - 14:59
Prestige Fund Management and Affiliated companies (Prestige), a specialist direct lending investment management group has recently celebrated the seventh birthday of its “Alternative Finance Fund” by passing USD500 million/GBP350 million in assets under management.
Group assets raised since 2008 now stand at approximately USD1.1 billion/GBP780 million. Prestige, focuses on commercial loans for small and medium enterprises (SMEs) in the UK, launched its loan strategy in 2008 and now has over 60 employees and retained consultants globally. Specialist financing areas of focus include asset, project and invoice finance related opportunities.
The milestone comes for Prestige as pension funds and other institutional investors focus more attention on real asset strategies that do not trade public markets in their quest for non-correlated positive yields.
Prestige owns several UK-based finance arrangers as part of its portfolio, and has lent hundreds of millions of pounds to client businesses in the UK. Loans are typically secured against real assets, including prime UK farmland as well as debentures over long term income streams. Prestige targets long term, consistent risk-adjusted returns with low systemic or market risk. Target returns are 5-7 per cent per annum, with a target volatility of 1 per cent per annum.
Craig Reeves, Founder of Prestige, says: “We are increasingly seeing larger investor groups turning to real assets funds because of the lack of correlation they enjoy when benchmarked against more traditional strategies. The market is seeing enhanced interest from smaller and mid-size pension funds attracted by the transparent nature of the loan-based investment approach: cash flows are more predictable, and risks are more widely spread. This often results in more consistent, positive returns to investors.”
The amount invested with loan based funds has been steadily increasing, with over USS19 billion/GBP13.5 billion secured by private lending funds in Europe in 2015, according to research group Preqin. The sector’s growth is being powered partly by a lack of alternative financing opportunities, as large banks continue to consolidate their existing lending operations.
“We’re pleased to be marking seven years of Prestige activity in the loan finance market,” adds Reeves. “This is largely down to the professional finance teams we have developed to manage our finance arrangers and the underlying client base. Their market knowledge and experience has earned the respect of our clients and has played an important role in the growth of our asset base.”
Prestige now has approximately 300 investor groups allocating to its portfolios, including banks, insurance companies, charities, private banks, family offices, advisory groups and investment intermediaries.
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