Fair Oaks Inc21 Regulatory News (FAIR)

Fair Oaks Income Fund Limited

31 October 2014

FAIR OAKS INCOME FUND LIMITED (the "Company")

(Incorporated in Guernsey under The Companies (Guernsey) Law, 2008, as amended, with registered number 58123 and registered as a Registered Closed-ended Collective Investment Scheme with the Guernsey Financial Services Commission)

Investment

Fair Oaks Income Fund Limited (the "Company") is pleased to announce that Fair Oaks Income Fund LP (the "Master Fund") has entered into binding contracts to acquire, in the primary market, $26 million notional of equity notes, representing 51% of the total equity of Covenant Credit Partners CLO II Ltd, a new CLO backed by a portfolio of US broadly syndicated, secured loans.

The manager of this CLO's portfolio is Covenant Credit Partners, an independent credit manager which has approximately $1bn of assets under management. Marc Boatwright, CEO and Managing Partner, was responsible for managing 13 CLOs at ING Investment Management until 2013. This CLO's current target portfolio has a principal value of $500 million across an expected 172 unique bank loan issuers, with an expected average exposure per issuer of approximately 0.6%.

The potential total return for this investment as estimated by the general partner of the Master Fund (the "General Partner") is between 15% and 17% per annum (see Note 1).

Pro-forma following this investment, the Master Fund's portfolio is estimated to provide broadly diversified exposure to over 540 unique bank loan issuers, with an average exposure per issuer estimated at 0.3%. The top 10 issuers represent an estimated 8.3% exposure and the portfolio is diversified across 40 industries. Approximately 93.8% of the underlying loans in the Master Fund's CLO investments are to US issuers, 4.6% to issuers domiciled in the UK, Germany, France and the Netherlands and 0.8% are to other European issuers (see Note 2). 

Since the IPO, 88% of the original net IPO and October placing proceeds have been committed through the initial portfolio and acquisitions.

Enquiries:

Fair Oaks Income Fund Limited

Email: contact@fairoaksincomefund.com

Web: www.fairoaksincomefund.com

Fair Oaks Capital Limited

Miguel Ramos Fuentenebro

DDI: +44 (0) 20 31024855

Email: mrf@fairoakscap.com

Praxis Fund Services Limited

Ben Le Prevost

DDI: +44 (0) 1481 755524

Email: Ben.LePrevost@praxisgroup.com

Camarco

Edward Gascoigne-Pees

Hazel Stevenson

DDI: +44 (0) 203757 4989

Email: ed.gascoigne-pees@camarco.co.uk / hazel.stevenson@camarco.co.uk

Numis Securities Limited

Nathan Brown, Corporate Broking

DDI: +44 (0) 20 7260 1426

Email: n.brown@numis.com 

Fair Oaks Income Fund Limited

Fair Oaks Income Fund Limited is an authorised closed-ended investment company incorporated in Guernsey. The Company was admitted to trading on the Specialist Fund Market of the London Stock Exchange on 12 June 2014. The Company's ordinary shares have the TIDM: FAIR and ISIN: GG00BMBN1D14.

The investment policy of the Company is to seek exposure to US and European CLOs or other vehicles and structures which provide exposure to portfolios consisting primarily of US and European floating-rate senior secured loans and which may include non-recourse financing. The Company will implement its investment policy by investing in Fair Oaks Income Fund LP (the "Master Fund").

The investment objective of the Company is to generate attractive, risk-adjusted returns, principally through income distributions. On the basis of market conditions as at the date of its prospectus, and based on the $1 per share issue price, the Company is targeting a net total return of between 12 and 14 per cent. per annum over the planned life of the Master Fund, including a dividend of (a) in its first year of an amount at least equal to 5.0 per cent. of the $1 per share issue price; and (b) in respect of each year thereafter, 3 month USD Libor plus 6.75 per cent. of the issue price (or an annualised equivalent in each case) (see Note 1).

Notes

1) The General Partner's estimate of the potential total return for this investment in calculated across certain scenarios and subject to certain assumptions. This and any other references herein to potential future returns or distributions are targets and not forecasts and there can be no guarantee or assurance that they will be achieved.

2) Based on gross par portfolios and weighted by percentage ownership of notional tranche and NAV/cash

3) This document is for information purposes only and is not an offer to invest. All investments are subject to risk. Past performance is no guarantee of future returns. Prospective investors are advised to seek expert legal, financial, tax and other professional advice before making any investment decisions.