Insurance company, Middle East | July 2017
Engagement at a glance
A Middle Eastern insurance company wished to invest in approximately USD 100 million in Leveraged Loans, with a focus on senior secured debt.
This investor was highly experienced in this asset class and already invested in ten Leveraged Loan funds. Yet they were struggling to find other managers that fit their strict requirements. These needs included: pooled vehicles only, a hard maximum holding limit of 15% of the fund (ie a minimum fund size of USD 650 million), monthly liquidity (allowing them to exit/enter efficiently, avoiding costly anti-dilution levies if possible), and preferably a European domicile.
- bfinance had done extensive previous manager research and selection in this asset class, which proved very useful in this challenging case. The team pulled on its experience in other asset classes and leveraged relationships with other firms – high yield bond managers, CLO managers, direct lending managers and private equity sponsors – to identify a comprehensive universe.
- Running the unrestricted bfinance search process, we managed to unearth four new managers offering funds that closely matched the investor’s requirements.
- In-depth qualitative analysis revealed that two had the most competitive resources, skills and capacity to outperform going forward.
- After detailed due diligence, the client decided to invest in one of these managers. bfinance continues to monitor results and progress.
Our specialist says
Leveraged loans provide some liquidity but are, strictly speaking, private investments. Many of the Leveraged Loan funds are private funds. Publicly available data on these funds is scarce when compared to high yield bond funds. Manager databases available for purchase include very incomplete listings of leveraged loan funds, usually limited to a few well-known players. This is an asset class where investigative research makes a big difference.