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Prestige Funds’ UK SME direct lending fund passes USD100m in AUM

Prestige Funds’ Luxembourg-domiciled direct lending fund, Commercial Finance Opportunities (CFO), has passed USD100 million in assets under management.

The fund draws on the expertise of a large commercial direct lending team composed of almost 100 personnel. They are part of Nucleus Commercial Finance, a specialist provider of finance which is based in London and focuses on secured lending to small and medium enterprises mainly in the UK.
Nucleus, part-owned by Prestige, lends to SMEs all over the UK, including companies active in construction, manufacturing, engineering and specialist service-based industries such as recruitment and IT.
Consequently, the fund’s returns derive from short and medium-term asset-based invoice financing, cash flow finance and specialist commercial lending. CFO is diversified across multiple industrial and commercial sectors. Loan origination and ‘in life’ management is overseen by a highly experienced Investment Committee at Finance Arranger level and a separate Investment Committee at Investment Manager level.
“Demand for private lending strategies is picking up around the world, and the growth in CFO’s assets is testament to this,” says Craig Reeves, Founder of Prestige Funds. “Investors are looking for real assets strategies that are not correlated to public markets, many of which have increased in volatility over the past year. The growth of this Fund demonstrates the international appetite for commercial lending strategies which can be carried out and supervised by experienced teams.”
Prestige is now more than 10 years old and has raised over USD1.5 billion. The Nucleus commercial lending team has been expanding since 2011 into one of the leading such teams of SME lending professionals in the country and have now lent over GBP750 million to over 700 SMEs.
Reeves adds: “CFO is based on a direct lending approach that relies on a strong loan management and monitoring process, often including on site physical meetings. Businesses that pass our rigorous due diligence process are typically conservatively managed, asset rich, cash poor and under-invested. They are in need of modernisation and productivity gains.”
The fund operates with a diversified investment portfolio of approximately 200 underlying loans to 200 underlying loan customers and targets annual net returns of between 6-7 per cent with annual volatility of approximately 1 per cent. The fund operates with no leverage and no derivatives exposure (other than forward contracts for FX hedging on currency share classes). The Fund has no performance fee and a 1.5 per cent annual management fee.

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