Prestige Funds' UK SME direct lending fund passes $100m in assets under management

By Daniel Lanyon on Tuesday 20 March 2018

Alternative Lending

The firm is seeing growing interest from institutional investors from Europe and around the world.

Prestige Funds has reported that its Luxembourg-domiciled direct lending fund Commercial Finance Opportunities has passed $100m in assets under management (AUM).

Prestige was founded 10 years ago and has raised more than $1.5bn in AUM. It specialises in asset-based, direct lending and its investors include global banks, independent asset managers, insurance companies, pension funds and family offices.

The direct lending fund offers financing to businesses that pass a rigorous due diligence process, Prestige says, and are typically conservatively managed, asset rich, cash poor and under-invested.

“They are in need of modernisation and productivity gains,” said Craig Reeves, Founder of Prestige Funds.

The fund has a diversified portfolio of approximately 200 loans to 200 underlying customers. It targets annual net returns of between 6-7 per cent with annual volatility of approximately 1 per cent. It is unlevered and has no performance fee and a 1.5 per cent annual management fee.

The Commercial Finance Opportunities fund sources loans via the Nucleus commercial lending team, a specialist secured lending to small and medium enterprises mainly in the UK, that has now lent over £750m to over 700 SMEs.

Nucleus, part-owned by Prestige, lends to SMEs all over the UK, including companies active in construction, manufacturing, engineering and specialist service-based industries such as recruitment and IT.

The fund’s returns derive from short and medium-term asset-based invoice financing, cash flow finance and specialist commercial lending. It is diversified across multiple industrial and commercial sectors.

“Demand for private lending strategies is picking up around the world, and the growth in CFO’s [the fund] assets is testament to this,” said Reeves.

“Investors are looking for real assets strategies that are not correlated to public markets, many of which have increased in volatility over the past year. The growth of this Fund demonstrates the international appetite for commercial lending strategies which can be carried out and supervised by experienced teams,” he added.

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