CCSL.L Regulatory News (CCSL)

Chenavari Capital Solutions Limited

Primary investment

Chenavari Capital Solutions Limited (the "Company") announces its first primary transaction.

Primary transaction

The Company has invested approximately £45 million in a mezzanine exposure to short-dated loans made by a Portuguese bank (the "Bank") to a diversified pool of over 8,200 underlying Portuguese SME borrowers. 

Upon acquisition, the transaction represents approximately 36% of the Company's net asset value and will amortise quickly. As a result of expected amortisation, at the end of 2014 under normal circumstances the transaction should have repaid 30% of the nominal amount and, at the end of 2015 under normal circumstances it should have repaid nearly 60% of the nominal amount.

This transaction brings the current peripheral European exposure above the indicative portfolio composition of the Company as stated in the Prospectus. However, the transaction comes with substantial risk mitigation built into its terms including a well-diversified reference portfolio and a rapid amortisation profile, thereby constituting an attractive investment for the Company and justifying the scale of commitment.

The Company has limited credit exposure to the issuing Bank as the proceeds of the transaction are required to be on deposit at one of four specified banks each of which has short term credit ratings of A-2 or a long-term rating of BBB (Standard & Poor's) or if not rated by S&P, P-1 (Moody's) (the "Deposit Banks"). The Company will enter into credit hedging arrangements in respect of the relevant Deposit Bank from time to time, such that credit exposure to any one Deposit Bank will not exceed 25% of the Company's net asset value as at the date that the credit hedge is entered into.

Following the above transaction, together with secondary market transactions executed since the beginning of November 2013, the Company is now approximately 65% invested (based on the Company's net asset value as at 31 October 2013).

The pipeline of transactions that the Investment Adviser has under review remains strong and the primary focus remains on good risk adjusted returns largely from bilateral transactions with robust credit exposures and structural protections. 

Enquiries:

Hobson Barnes or Kirstie McLaren

Chenavari Investment Managers

Email: Investor-relations@chenavari.com

Telephone: +44 20 7259 3600