By Daniel Lanyon on Monday 30 October 2017
Demand for alternative income assets is rising thanks to low rates and Quantitative Easing.
The Church of England is among the institutional investors upping its stake in the RM Secured Direct Lending investment trust following its latest round of fundraising.
The RM Secured Direct Lending, which invests in the private debt market, is one of a quickly growing stable of closed-ended funds exploiting the growth in demand for non-bank lending.
SMEs, locked out from capital markets owing to banks retreat from lending, have found alternative means to borrow. On the other side of the equation investors are hungry for income owing to fixed income’s low-yield levels and an ageing population.
The fund launched in December 2016 with a mandate to invest in secured debt of UK SMEs and is currently trading on a 2.6 per cent premium. It recently raised a further £30m from investors including CCLA Investment Management.
CCLA is an asset management company that represents a number of charities’ investment arms, including those run by the Church of England.
This includes the CBF Church of England Investment Fund, The CBF Church of England UK Equity Fund, COIF Charities Ethical Investment Fund, COIF Charities Investment Fund, The Ely Board of Finance Ltd, Lankelly Chase Foundation, The Land Trust, the Police Dependents Trust and the Southwell & Nottingham Diocesan Board of Finance.
It increased its holding in RM Secured Direct Lending from 14.93 per cent to 19.96 per cent in the recent fundraise.
RM Secured Direct Lending is managed by James Robson and Pietro Nicholls of RM Capital Markets. Fees are 0.5 per cent pa of net assets, although this increases to 0.875 per cent if net assets are above £75m. In the first three years, 50 per cent of the management fee will be paid in shares (there is no performance fee).