LONDON (Alliance News) - Chenavari Capital Solutions Ltd Monday said it has invested about GBP4.0 million in a very thick first-loss bilateral transaction referencing a book of leveraged loans financed by an unidentified bank, its fourth primary transaction.
In addition, Chenavari Capital Solutions said it expects a further investment to close by the end of September for about GBP15.0 million equivalent.
In a statement, Chenavari Capital Solutions said the portfolio primarly provides exposure to European and UK corporates with ratings higher than B-. The portfolio is diversified with maximum concentration of 2.5% by group of borrowers, it said.
"While taking the first loss risk, the investment is very resilient given the thickness of the tranche of about 20%. The transaction was made possible thanks to a proprietary structure designed by the investment advisor, achieving the required regulatory capital treatment," Chenavari Capital Solutions said in a statement.
"The company is not exposed to the counterparty risk of the bank. While the expected duration of the investment is shorter than usual, this is compensated by an attractive base case internal rate of return," the company added.
Chenavari Capital Solutions said the deal represents about 3% of its net asset value. The company is now about 74% invested, based on its NAV at the end of July.
"The investment adviser continues to work on a pipeline of transactions with multiple deals being analysed with attractive risk-adjusted returns," Chenavari Capital Solutions added.
The company is managed by Chenavari Investment Managers.
Chenavari Capital Solutions seeks to exploit opportunities arising from the increased regulatory capital requirements for European banks under the Basel III framework, a package of regulations aimed at increasing the safety of the banking system, as banks look to offload assets that require them to hold higher levels of capital.
Chenavari Capital Solutions shares were untraded Monday, last quoted at 106.39 pence.
By Samuel Agini; samagini@alliancenews.com; @samuelagini
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