19 Dec 2014 17:26
Chenavari Capital Solutions Limited
Primary investment
Chenavari Capital Solutions Limited (the "Company") announces its sixth primary transaction.
Primary transaction
The Company has today invested €8.6 million, out of a total transaction size of €45 million, in a first loss exposure to a diversified portfolio of SME loans extended by a large Italian corporate and investment bank (the "Bank"). The loan portfolio is highly granular, containing in excess of 1,800 Italian borrowers, primarily located in Northern Italy. The portfolio is static, and the amortising nature of the loans causes the first loss risk to rapidly delever.
The purpose of the transaction is to manage risk weighted assets and optimise capital of the Bank, and the transaction will furthermore bring economic capital benefits to the Bank. The transaction is the first of its kind for the Bank since 2007, and forms an important strategic cornerstone on which the Bank intends to base future issuances. The Investment Advisor to the Company has carefully assessed the full through-the-cycle default and recovery histories for the loan book, and has fully examined the robustness of the underwriting, monitoring and recovery processes. This investment will benefit from the Bank's solid underwriting processes and strong local presence in the Italian market, as well as a comprehensive set of work-out strategies employed by the Bank.
The Company has direct credit exposure to the issuing Bank as the proceeds of the transaction stand on deposit with the Bank. The Bank is a strong investment-grade rated institution. The credit exposure to the Bank will be closely monitored and will be pro-actively hedged by the Company when deemed appropriate. The transaction benefits from a number of attractive structural features, providing the company with a strong resilience to stress scenarios.
Upon acquisition, the transaction represents approximately 5% of the Company's net asset value. Following the above transaction, the Company is now approximately 88% (including hedges and collateral) invested (based on the Company's net asset value as at November month end 2014).
Enquiries:
Kirstie McLaren
Chenavari Investment Managers
Email: Investor-relations@chenavari.com
Telephone: +44 20 7259 3600