Opalesque Industry Update - The affiliation between the international investment operation Prestige and Methexis Capital has borne first fruit with the launch of Commercial Finance Opportunities (CFO), a fund specializing in secured lending to private companies, in the UK.|
The arrival of CFO follows quickly on the announcement (12/08/2013) of the purchase by Prestige Fund Management of a significant equity stake in Methexis Holdings (Isle of Man), the parent company of Methexis Capital Advisors LLP, a UK based FCA regulated investment adviser.
The new Fund, structured as a Luxembourg-registered SICAV-SIF, invests in a diversified portfolio consisting of short-term commercial and industrial Account Receivables and is currently offered to experienced investors in five currency classes with a minimum initial investment of EUR€125,000 (or equivalent).
CFO employs an absolute-return strategy designed to outperform traditional investments in terms of annualized market-based volatility risk. This is achieved via a diverse portfolio that manages individual client and sector asset allocation risk and generates a steady stream of interest income with low default risk both on individual cases and the wider asset class. All transactions are secured on assets (typically outstanding invoices of underlying customers) together, often, with personal guarantees and charges on property pledged by the Directors of the borrower.
“The launch of CFO is a response to the increasing popularity, among investors, of non-market based / private finance investment strategies which typically offer attractive consistent positive returns with lower volatility and correlation to traditional equity and fixed income strategies,” said Craig Reeves, Director and Founder of PFM.
“In the last five years, Prestige and its affiliates have become leading players in this niche area and now operate and advise on over US$400m for a wide range of clients in this space alone. The launch of CFO, as a multi-currency class SICAV, brings this important investment strategy to a still broader investor group. Additionally with UK bank lending to small and medium sized companies remaining significantly lower than 5 years ago there remains a significant opportunity to fill some of the gap in funding,” Reeves added.
CFO is targeting capital appreciation of 6%-8% net p.a. on the back of annualized volatility of 1% p.a. This low volatility growth objective reflects the multi-income stream portfolio which is diversified across six financing categories:
Factoring Purchasing businesses’ account receivables at a discount. The lender will be receiving the payments on the invoices directly from customers and repays the remaining value of the invoices to the borrower minus a fee.
Invoice Discounting This is similar to factoring but the credit control and follow-ups are done by the borrowing company instead of the lender.
Bridge Financing Loans guaranteed by assets such as real estate, publicly traded stock, machinery and equipment, royalties and account receivable.
Trade and Commodity Financing Financing of pre-export commodities.
Inventory Financing Loans made to manufacturers using inventory as collateral.
Floor Plan Financing Credit is provided to purchase high-priced goods, the loan will be secured by the product ‘on the floor’.
CFO’s five currency classes are Euros, US Dollars, Sterling, Swiss Francs and Swedish Kroner. Subscriptions are monthly and redemptions are monthly on 30 days’ notice.