Challenger bank teams up with direct lending fund

By Daniel Lanyon on Tuesday 7 November 2017

Alternative LendingDigital Banking

Partnerships are an increasingly popular trend in the disruptive financial world.

The RM Secured Direct Lending investment trust has signed a Revolving Credit Facility of £10m with challenger bank OakNorth.

The £59m fund, which is listed on the London Stock Exchange, specialises in secured debt investments in firms across Europe and recently raised a further £30m through a C share issue last month.

The new revolving credit facility will provide the fund with flexible' capital aimed at maintaining and preserving liquidity and powering  its pipeline of investments. The fund will not incur any non-utilisation fees in connection with the facility.

RMDL has previously partnered with OakNorth on two joint loans to finance the development of a luxury hotel in central London, L’Oscar and to Strawberry Star for the purchase and development of a mixed-use site in Wandsworth.

Since listing in December 2016, RMDL has invested in 21 Loans across 11 sectors, including healthcare, energy, property, hospitality and leisure. In October 2017, RMDL raised an additional £30m which will also be used to continue to build its portfolio of investments. The average yield on its investments is 8.26 per cent with an average life of 3.74 years, the fund’s investment manager says.

Pietro Nicholls, Investment Manager of RM Capital Markets Limited, says the deal provides additional flexibility - following the recent £30m equity raise - to act quickly on attractive investment opportunities.

"We have an active pipeline of higher yielding, secured lending opportunities which will further broaden our portfolio and enable us to continue to deliver growing and sustainable returns to shareholders,” he said.

Ben Barbanel, Head of Debt Finance, and Mohith Sondhi, Debt Finance Director at OakNorth says it is not only the first transaction with a listed company, but also its first loan to an investment trust.

“Our Credit Committee was reassured by the extensive experience of the management team – over 120 years collectively – as well as the RMDL’s strong track record and diversified portfolio.”

The fund, which launched in December 2016, is currently trading on a 0.8 per cent premium.

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