The new fund will provide alternatives for experienced investors who do not have natural access to illiquid debt markets. The fund, in the form of a limited partnership, will invest in target funds with stylistically differing investment strategies, each with a common focus on corporate debt financing in Europe and North America. The fund raised EUR 59 million from domestic investors at the first closing as of May 14, 2021.
Traditionally, banks have been the main source of corporate financing, but over the past decade, changes in the regulatory framework for banks have led to a reduction in their ability and willingness to provide financing for businesses. At the same time, the rising demand for debt capital, combined with the declining role of banks, has increased the demand for private financing.
Evli is responding to this demand by launching a new Private Debt Fund I fund, which provides a broadly diversified core investment in the private debt asset class investing in illiquid corporate debt instruments. The fund will invest in funds with stylistically differing investment strategies, focusing on Europe and North America. The fund is aimed at professional investors and a limited number of non-professional clients who wish to diversify their investment portfolio outside of the traditional asset classes.
At Evli, the creation of the new fund is also seen as essential because the assets under management in its Private Debt funds have almost quadrupled since the financial crisis, and the growth is expected to remain very strong in the coming years.
"Private Debt funds contribute to meeting the growing demand for corporate debt financing and the reduced supply of traditional debt financing by providing investors with a channel to offer private financing, particularly to companies that do not have any natural access to large financial markets due to, for example, the size of the company," says Ville Toivakainen, Portfolio Manager of Evli Private Debt Fund I.
"Most companies need financing over the course of their life cycle, and this means that the loans come in many different types and formats. A company typically has only one or two series of shares, which remain the same from the time the company is set up until it shuts down. In contrast, the number of loans varies greatly from one period to another, and there can even be dozens or hundreds of different types at any one time. Debt financing is therefore much more complex and diverse than equity investing, which provides the investor with an attractive and diversified addition to their overall portfolio."
An alternative for experienced investors alongside traditional investments
The Evli Private Debt Fund I is part of Evli's unlisted asset class offering, which aims to provide investors with all the building blocks to create an investment portfolio with an optimal risk-return characteristics.
”Our Private Debt fund will be a global, broadly diversified component of an overall portfolio with clearly predefined investment and allocation objectives. The fund focuses on both North America and Europe, in contrast to many other players who limit their focus to just Europe. In addition, the fund's strategy allocation is predefined and the fund is not "opportunistic" in terms of its strategy. Evli's alternative investments unit is very strongly resourced and the fund team has a long experience in both private equity and private debt investing and fund selection,” states Tero Tuominen, Managing Director of Evli Fund Management Company Ltd.
The Evli Fund is intended for professionals and a limited number of non-professional clients, who will make an investment of at least EUR 100,000, and who are deemed to have a sufficient understanding of the fund and its investment activities. The fund is suitable for investors with a long-term investment horizon, and who wish to diversify their investment portfolio beyond the traditional asset classes.
"The loans granted by the target funds are mainly floating rate, which is very attractive particularly in an environment of rising interest rates. The asset class is also fast-growing, so both investors and companies in need of funding are increasingly adopting the approach of this asset class, thereby increasing the range of investment opportunities," says Tuominen.
Responsibility is part of the investment process
Responsibility is integrated into Evli's asset management investment activities, and company's funds comply with the principles of responsible investment and standards in line with ESG (environment, society and good governance) criteria. The Evli Private Fund I fund does not invest in funds that do not have an ESG policy or do not take ESG criteria into account in their investment process.
Evli's alternative investment product offering covers real estate, unlisted equities, private debt, infrastructure and forestry, which are managed through nine funds. Evli's alternative investments portfolio management team consists of over 20 investment professionals, and the funds' total assets under management is around EUR 1.2 billion (March 31, 2021).
For more information please contact:
Tero Tuominen, Managing Director, Evli Fund Management Company Ltd, tel: +358 50 439 2867, tero.tuominen@evli.com
