The new Evli Leveraged Loan fixed-income fund capitalises on Evli's strong knowledge of the Nordic corporate debt markets and targets investments in sectors that are highly resilient to cyclical fluctuations. Evli strongly believes that Nordic leveraged loans offer a higher return potential and better credit risk profile than their European counterparts in the form of an attractive floating rate investment instrument.
A unique fund investing in well-known companies and industries
Intended for professional investors and a limited number of non-professional investors, the Evli Leveraged Loan fund is a specialised investment fund (AIF) registered in Finland that also offers investors semi-annual liquidity, which takes into account the relatively limited liquidity of the available investment instruments. This breaks new ground for Evli, while also differentiating the product from its competitors’ offerings.
"Most of the competing funds in the leveraged loan asset class are closed-end funds that do not provide liquidity to investors. This new Evli Leveraged Loan Fund is unique and the first of its kind in Finland and the Nordic countries," says Jussi Hyyppä, Portfolio Manager of the fund.
The Nordic leveraged loan market is a growing area of corporate finance, especially for growth companies, typically driven by institutional investors, and which also has a close connection to the high yield corporate bond market. A leveraged loan is a so-called syndicated bank loan, in which a group of investors provides a tailor-made bank loan with the same lending terms to a borrower. Many well-known medium-sized companies prefer this market as a funding channel compared to traditional bond issuances. Syndicated bank loans are marketable investment instruments. Nordic leveraged loans offer investors a conservative capital structure and lending terms combined with good yield potential. Leveraged loans are always floating rate and secured fixed income investments, with very low interest rate risk, and the currency risk is hedged.
Evli's Nordic experience is an asset - locality is a great advantage
Evli has over 20 years of experience in the Nordic corporate bond market, practically since the market's inception. By leveraging this, Evli wants to offer investors a better opportunity to invest in a market that normally requires time, expertise and comprehensive analysis to access. Evli is an asset manager that is independent from the banks, which enables it to operate efficiently in the leveraged loan market.
"Nordic companies are generally very well managed, have clear governance models and are at the forefront when it comes to the ESG themes of the world. The creditworthiness of Nordic companies is at a very high level, and expectations for a positive economic outlook indicate that the credit quality will remain high in the future," says Hyyppä, analysing the market.
The portfolio manager believes that another advantage of investing in the Nordic region is that the majority of the Nordic business landscape consists of well-run small and medium-sized companies that are successful in their own segments and actively seeking expansion of their business through growth investments and acquisitions. This creates situations where new funding is needed from the debt and capital markets.
"In corporate bond investing, locality is a major advantage when evaluating investments, as it enables a more accurate risk analysis and creates the potential for increased returns. This applies especially when investing in high yield.”
Flexible investment strategy brings opportunities
The investment strategy of the Evli Leveraged Loan fund is flexible and enables investments in selected portfolio companies with the most appropriate instrument at any given time.
"The fund focuses on direct debt investments in the Nordic region and offers the possibility of co-investing with selected local banks to secure capital. Evli's strong and well-established position as an unbiased and reputable institutional investor, together with the size of the assets under management and the ability to invest in both leveraged and high yield debt, make Evli an attractive and flexible partner for Nordic companies and other participants in the Nordic corporate financing ecosystem," says Hyyppä.
The development and sale of alternative investment funds (AIF) is a key part of Evli's strategy, and the offering currently covers the unlisted equities, real estate, infrastructure, forestry and private debt asset classes. Evli's alternative investment funds have total client assets of EUR 1.3 billion under management (June 30, 2021). The funds are intended for professional investors and a limited number of non-professional clients who are considered to have a sufficient understanding of the funds and their investment activities and who wish to diversify their investments beyond the traditional asset classes.
See also Evli Leverage Loan fund page
For more information:
Jussi Hyyppä, Head of Loan Strategies, Evli Fund Management Company Ltd, tel. +358 44 242 9596, jussi.hyyppa@evli.com
