Cheyne Strategic Value Credit has successfully raised its second fund, Cheyne European Strategic Value Credit Fund II (SVC II) securing EUR 1 billion capacity less than six months after its first close, with strong support from existing investors and significant excess demand from new investors.
Cheyne Strategic Value Credit was established in 2017 as a new investment division within alternative asset manager Cheyne Capital and employs a value-oriented, opportunistic approach to investing in corporate credit, with a focus on special situations and debt restructurings. The group’s inaugural European Strategic Value Credit Fund (SVC I) was substantially oversubscribed and closed at its hard capacity limit of EUR1 billion in June 2019.
SVC II continues the same investment strategy as its predecessor fund, providing constructive capital solutions to mid-market corporates facing liquidity and other complex financial challenges, working on a consensual basis with management teams and shareholders to effect a positive turnaround. The new fund has already initiated seven investments, in five different European countries and across a range of industries including business process outsourcing, ground & cargo handling services, security solutions and food products.
As part of its aim to promote higher ESG standards within private credit, the team has adopted an enhanced ESG framework for new investments with an increased emphasis on positive engagement. The group is seeking to influence ESG strategy and outcomes more meaningfully at the corporate borrower level and is actively incorporating ESG-linked covenants in new facility agreements. This includes, for example, pricing incentives when pre-defined ESG targets have been met and adhered to.
Key sources of opportunity for the fund include the ongoing sell-down of underperforming and other non-core corporate loans by European banks, and the provision of rescue and liquidity bridge financings to stressed but fundamentally viable businesses. The fund has been deliberately capacity-constrained to maximise its participation in the broadest range of opportunities and capital structures, with a focus on smaller transaction sizes which fall below the minimum size requirements of the larger distressed debt and opportunistic credit funds.
Anthony Robertson, Managing Partner & CIO of Cheyne Strategic Value Credit, says: “We are honoured that so many of our existing investors have chosen to continue the journey with us, and we warmly welcome our new investors. There is a huge need for alternative sources of capital to support European mid-market businesses facing financial challenges, particularly those which have been negatively impacted by the pandemic. Our team has a recognised track record in providing flexible capital solutions to facilitate a normalisation and recovery in operating performance.”
