Prestige Funds to offer New Private Finance Fund targeted at USA based opportunities
Prestige Group, a specialist private lending asset manager with a successful 12- year track record in the private debt market, is adding a new US strategy to its existing range of successful alternative credit funds.
Business Finance Opportunities (BFO) is focusing on asset-based lending in short and medium-term commercial loans, specifically in the United States. The loan portfolio will be managed by dedicated, specialist Finance Arranger – Capstone Capital Group, a US-based private lender focusing on invoice and factoring finance with a successful track record in the market stretching back over three decades.
Established in 1990, New York based Capstone has originated over USD6 billion in transactions over that time. Capstone and Prestige have worked together successfully since 2012. The Capstone team can draw on lengthy experience within the US private lending and trade finance space and apply rigorous analysis to new prospects within the finance market.
The Cayman Islands-domiciled BFO will invest in a diversified portfolio of secured finance opportunities across a broad range of commercial and industrial sectors within the USA. Most of the financing activity will be secured against assets including accounts receivable, inventory, equipment, machinery, and real estate.
The Fund will be aimed at institutional investors looking to diversify their investment portfolios in a strategy that has a low correlation to traditional bonds and equities. The Fund will operate as an open-ended vehicle although it will have monthly liquidity on 90-180 days and will be available in accumulation and distribution share classes in GBP/USD/EUR currencies. The Fund will operate without leverage or performance fees. The target asset raise in year one will be USD50-100 million, although the current investible opportunity pipeline stands at USD250 million over the next one-two years.
Like Prestige’s other private debt strategies, BFO is designed to provide a consistent market return under most circumstances and is not correlated to traditional bond and equity markets. The investment strategy already has a demonstrable track record from 2009 to the present, with total annual compound returns in the 7-8 per cent range. It will target similar capital appreciation with annualised volatility of 1 per cent or less.
Craig Reeves, Founder of Prestige group, says: “We believe it is timely for us to be bringing Business Finance Opportunities to investors. The US government has made progress in the battle against the Covid-19 virus and many of the core sectors BFO lends to will be beneficiaries from projected increases in US government spending. In some respects, Covid-19 has made investment and business decision making quite ‘binary’ in so far as it is easier to identify the winners in individual commercial sectors. The BFO portfolio provides debt-based exposure to American SMEs at a crucial period of economic growth, managed by a highly seasoned US-based team of finance professionals.”
Joseph Ingrassia, Managing Member at Capstone Capital Group, adds: “We are emerging from some very challenging times in the US smaller company private finance sector, but this part of the US economy looks set to improve its prospects. Many companies in areas like construction, for example, rely on private finance to operate efficiently. We are looking forward to playing an active role in helping America to rebuild.”
Financings within the BFO portfolio are only approved following extensive credit analysis and background research. Borrowing facilities are only approved following a two-tier risk management process.
The BFO is being added to an existing Prestige Funds range which includes funds focused on UK renewable energy infrastructure finance and SME lending strategies. Prestige Funds also recently announced the launch of a dedicated shariah-compliant impact fund, also focused on opportunities in the UK.
The BFO leverages the combined expertise of both the Prestige Group and the considerable team of small business financing experts at Capstone Capital Group.
Prestige Funds has raised over USD2 billion internationally for its range of alternative finance funds and its wider group of dedicated, specialist Finance Arrangers have raised over USD300 million in wholesale debt in 2020 alone. It is active in the SME market in the UK and the US and has developed a huge amount of in-house expertise in terms of managing financing for the smaller companies’ market.