Certior Capital launches new SME direct lending fund targeting 8-10% net returns

By Daniel Lanyon on Thursday 23 August 2018

Editor's PickSavings and Investment

The firm’s latest fund of credit funds will focus on lending across Europe to smaller companies.

Certior Capital has launched a new fund, Certior Credit Opportunities Fund II, raising €51m, according to a statement from the boutique asset manager.

Predominantly focused on the European SME direct lending market and mostly seeding emerging credit fund managers, the new fund has seen committments mostly come from a host of Finnish institutional investors.

The fund is structured as a Luxembourg special limited partnership to facilitate investment by institutions from across Europe and has a final fundraising target of €300m.

The new fund follows the same investment strategy as its predecessor, Certior Credit Opportunities Fund, which closed on €87m in October 2016.

Lending for that fund was all in Europe with a bias towards the UK, German-speaking Europe and Spain.

Ari Jauho, Chairman of Certior Capital, says more and more institutions are looking at the smaller unsponsored lending opportunity across Europe.

“Banks continue to show little interest in lending to European SMEs. While a lot of capital has been raised for direct lending funds targeting a limited pool of larger transactions, SME direct lending funds focusing on €5-25m loans have seen far less fundraising.”

“As a result, SME direct lending still looks very attractive from a risk-adjusted basis. Smaller loans can offer investors a high cash yield, attractive all-in pricing with upside potential, conservative capital structures and lender friendly terms with full covenants”.

“Through seeding experienced country-specific management teams, often in their first institutional funds, we are able to achieve preferential terms as well as coinvestment rights”, “Overall, we aim to achieve returns of 8-10 per cent net to investors through a diversified pan-European portfolio of 200+ senior secured or asset backed loans”.

Certior Capital also currently manages three portfolios: Certior Credit Opportunities Fund invests SME private credit funds and makes investments directly into loans, Certior Credit Investments invests in European mid-market direct lending transactions and Certior Private Equity Fund I focuses on European small- and mid-market private equity opportunities.

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