Italian P2P firm BorsadelCredito.it has followed in the footsteps of its UK antecedent Funding Circle by launching a closed-end fund. The unlisted fund, which is called Colombo, hopes to raise €100m to invest across a 5 year timespan, and is managed by BorsadelCredito.it (through a vehicle named ART SGR SpA). The fund’s custodian bank is Caceis Bank.
By investing in Italian SME loans, originated exclusively by BorsadelCredito.it, the fund will target a yield of 5 per cent (5.5 per cent pre-tax). But perhaps most notably, the vehicle will benefit from the coverage of the Central Guarantee Fund, which will cover any losses for up to 80 per cent of the total amount raised. The CGF liquidity is made available by the Italian government. The GCF scheme was launched back in 1996 but has, until now, been available only to banks.
The Euro-denominated Colombo fund charges investors management fees of 1-1.25 per cent, in addition to a performance fee of 20 per cent of any surplus yield beyond the targeted 5 per cent. The minimum investment varies between €500k and €2.5m, depending on whether investors buy A or B shares. Various closings are planned for the fund within the first 2 years, and its NAV will be calculated twice a year.
One of the core benefits being touted by BorsadelCredito.it is the diversification that the fund will offer to investors – by geography, risk grade and sector. The average loan size in the underlying portfolio will be €100k, and no one loan will account for more than 1 per cent of the total portfolio.
“We are particularly proud of this further innovation that supports Italian small companies, which are the main asset of our country,” said Antonio Lafiosca, group COO at BorsadelCredito.it. “With the entry of institutional investors, the resources available to SMEs will multiply and contribute to the creation of jobs, will boost economic growth, without forgetting the disruptive impact that funds like Colombo can have on the country’s social fabric. Through its team, BorsadelCredito.it has sIubscribed shares of the fund to attest that we firmly believe in this initiative.”
In the UK, small business lending platform Funding Circle listed its SME Income Fund on the London Stock Exchange in November 2015, raising £150m. Today the vehicle has a market cap of over £320m. It invests exclusively in loans originated by the Funding Circle platform, providing a familiar route to market for institutional investors.
BorsadelCredito.it’s hope is that the new Colombo fund will provide a smooth connection between institutional capital and Italian SMEs, acting as an important support system for the real economy.
The BorsadelCredito.it platform has facilitated €16.5m in loans to Italian businesses to date, according to AltFi Data.
Edoardo Matarrese and Roberto Condulmari are fund managers at Compass Asset Management. Compass manages a SIF by the name of Blue Lake Alternative Credit, which will be among the Colombo Fund’s initial investors.
“The launch of BorsadelCredito’s Colombo Fund represents a watershed event for Italian marketplace lending to SMEs,” they said. “The Fund is the right instrument to fill one of the most fundamental gaps vis-a-vis countries like the UK and France: the lack of quasi-permanent funding from institutional investors.”