GCP Asset Backed Income fund deploys war chest

By Daniel Lanyon on Monday 13 March 2017

Alternative Lending

The investment trust, having recently changed its name and undergone a C share capital raise, is deploying new cash.

The investment managers of the GCP Asset Backed Income investment trust have committed to two loans of up to £17.5m for financing for UK residential property.

The £240m CP Asset Backed Income fund invests in asset backed loans. It was formerly called Project Finance Investments. Loans are secured against cash flows and/or physical assets such as equipment. These are usually in sectors such as asset finance, property, energy and infrastructure. It targets an IRR of 7-8 per cent on the issue price, with returns mainly aimed at quarterly dividends rather than capital growth.

The investments are generally medium to long-term fixed or floating rate loans, predominantly in the UK.  It raised £106m at its initial public offering (IPO) back in October 2015, but has since done a number of C Share raises, the latest of which raised £15.6m.  The proceeds have been invested in just two larger ticket loans.

One loan is £15m in size and has a term of three years, and will be secured on a subordinated ranking basis against a portfolio of eight co-living properties. The loan note will be issued in tranches, with an initial amount to be advanced of £5.3m.

The second loan is £2.5m in size and has a term of five years. It will be drawn immediately and will be secured against a portfolio of first ranking charges against UK residential property.

The fund has a management fee of 0.9 per cent of net assets and in addition, the manager may at its discretion, charge an investment fee of up to 1.0 per cent of the cost of each investment.

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