Palio UK Mid-Market Debt Fund is to list its ordinary shares on the Specialist Fund Market of the London Stock Exchange and the Channel Islands Stock Exchange through a proposed placing and offer for subscription with a target fund raise in excess of GBP150m.
The company will be advised by Palio Capital Partners.
The company will aim to generate superior risk-adjusted returns comprising both income and capital, through originating and structuring a combination of senior debt (c.50 per cent of portfolio), mezzanine instruments (c.40 per cent of portfolio) and junior equity (c.10 per cent of portfolio) into small and medium sized UK enterprises, while emphasising the preservation of capital and capital appreciation.
The company has indicated a target net dividend yield of seven per cent on the issue price in the first year and an average net dividend yield of eight per cent on the issue price thereafter, with a target net total return of 12.5 per cent on the issue price per annum.
The company’s investment policy is for the portfolio to be invested in loans to assist predominantly UK private equity firms in acquiring UK companies with enterprise values of between approximately GBP10m and GBP100m.
Mike Henebery, chief executive officer of Palio Capital Partners, says: “We are excited to launch Palio UK Mid-Market Debt Fund Limited which will aim to capture the attractive current opportunity in the UK lower mid-market. By collaborating with private equity houses to lead and arrange all loan finance on a private equity deal, the company is well placed to capture potentially attractive, risk-adjusted returns. The company’s differentiated model offers greater choice to small and medium sized enterprises by providing a suite of flexible loans from one source, supported by the longstanding private equity and debt experience of its senior executives within the lower mid-market.”
