Prestige secures institutional mandates for $875m

Originally published on 23 November 2017

Prestige has announced a new series of mandates from institutional investors outside the UK for its private lending credit funds. The mandates are the latest to be received from non-UK institutions that are allocating to the UK-based private lending specialist.

The investors include:

  • A Swiss-based industrial corporate pension fund
  • A South Korean-based financial group
  • A Spanish-based university endowment

Despite last year’s Brexit referendum, Prestige continues to see a high level of institutional interest, including in some of the sterling based share classes of its credit funds. In addition, several dedicated share classes have been created for larger investors such as sovereign wealth funds and state-backed pension schemes.

Craig Reeves, Founder of Prestige, said: “Non-UK investors like the plain vanilla yield characteristics of private lending strategies. Part of the attraction is also our focus on areas of the market neglected by traditional lending institutions, and the diversification of risk across hundreds of individual loans.”

The mandates were secured over the course of the last 12 months, demonstrating the confidence foreign investors still have in the UK economy despite the ongoing Brexit negotiations. Prestige has raised approximately $1.5 billion since 2008 and currently manages approximately $875 million.

Prestige, through its two UK-based, specialist finance operations, has provided almost 15,000 loans to 6,000 clients since it launched. It focuses on two main strategies: a Cambridge-based, credit team that lends to small companies in the agricultural sector with a focus on short and medium term ‘asset finance’ and ‘project finance’, and a London-based, direct lending team with a focus on short term ‘invoice’ and ‘cashflow’ finance. Both teams consist of a number highly experienced former commercial bankers, finance and risk specialists, and both businesses are increasingly playing a consulting role in assisting small firms to ‘finance in’ productivity; and to ‘finance out’ some of their fixed costs, generating significant value beyond simply lending money.

“This is a strategy that is expanding considerably and is increasingly being viewed by some institutional investors as an asset class in its own right,” Reeves commented. Indeed, AIMA, which now operates a dedicated ‘Alternative Credit Council’, recently published significant new research suggesting that assets in private debt funds may grow to USD1 trillion by 2020.

“More funds of this type are launching across many different specialist commercial and industrial sectors so it is important that investors look closely at the expertise of the teams assembled to carry out lending and the due diligence activities on the ground as well as their ability to understand (and mitigate) any non performing exposures. Specialisation and strong sector knowledge as well as remaining close to your customers is key.”