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Sovereign wealth fund invests $20m in alternative credit fund

By Daniel Lanyon on 8th May 2017

Prestige asset management has launched the new mandate for their lending fund and opened the share class up to other investors.



Prestige Fund Management, the specialist asset manager that focuses on lending to small and medium businesses in the UK, has launched a second new share class for a Middle East based, sovereign wealth fund.


The new mandate, from a single group in the region, involves a minimum three year commitment to Prestige’s direct lending strategy. Unlike the first share class launched last month, this share class will be open to outside institutional investors as well in a variety of hedged currencies (GBP / EUR / USD / CHF).


The unnamed sovereign wealth fund has invested an initial $20 million structured via a dedicated share class that will pay a quarterly coupon of 1-2 per cent, with the option to increase the investment at a future date, the firm says.


Craig Reeves, Founder of Prestige Fund Management, says the new investment reflects a growing interest from institutions for alternative credit exposure.


“The trend for pension schemes to re-allocate from low-yielding bonds to private debt represents a major shift in the institutional investment landscape: private lending funds meet part of that demand for consistent, uncorrelated returns,” he said.


Asset-based lending in the UK is rapidly becoming mainstream, growing 22 per cent last year, with £4.3bn of finance available in December.


 The UK government has also started to require banks to pass on the details of small companies they are not able to support to specialist lending platforms, creating a larger market for private lending funds.


According to research group Preqin, 57 per cent of institutional investors plan to commit more to private debt in 2017 than last year, while 62 per cent said they planned to increase their allocation over the longer term as well.


Founded 10 years ago, Prestige has raised over $1.4 bn for its UK-focused asset-based lending funds.


It specialises in lending to small and medium-sized companies in the rural sector, including project finance for alternative energy and other environmentally-friendly infrastructure projects.



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