6 May 2014 10:30
Chenavari Capital Solutions Limited
Primary investment
Chenavari Capital Solutions Limited (the "Company") announces its second primary transaction.
Primary transaction
The Company has invested approximately £9 million in a thick first loss exposure to primarily investment-grade corporate loans made by a German corporate and investment bank (the "Bank"). The loan portfolio is granular with over 250 loans across more than 150 borrower groups and is well diversified with respect to both geography and industry classification.
The transaction provides exposure to primarily global investment-grade corporate borrowers as part of the Bank's international corporate relationship lending portfolio. The Bank has a very successful program of issuance to manage both risk-weighted assets ("RWAs") and risk limits. The Bank's relationship lending has exhibited extremely low losses over the past 11 years as a reflection of its strong underwriting, pro-active risk-management and work-out efficiency, which this investment will also benefit from. The underlying pool of loans is predominately comprised of revolving credit facilities, which are generally undrawn, reducing the credit risk of the transaction.
The Company has credit exposure to the issuing Bank as the proceeds of the transaction stand on deposit with the Bank which is a highly-rated, systemically important bank. The credit exposure to the Bank can easily be hedged should the Company decide to do so. The transaction benefits from a number of attractive structural features as well as a high detachment point, providing us with a strong resilience to stress scenarios.
Upon acquisition, the transaction represents approximately 7% of the Company's net asset value.
Following the above transaction, together with secondary market transactions executed since the beginning of November 2013, the Company is now approximately 70% invested (based on the Company's net asset value as at 31 March 2014).
The pipeline of transactions that the Investment Adviser has under review is extremely strong with another ten transactions being analysed by the investment team. The primary focus remains on attractive risk adjusted returns from 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