BNY Mellon Asset Management boutique Alcentra is to launch a closed-end fund in 2012 investing in European company debt.
The Alcentra European Floating Rate Income fund will be listed as an investment company on the London Stock Exchange and invest in senior secured loans and floating rate senior secured bonds.
The fund – which will not use leverage – will aim for a quarterly dividend of 5.5% during the first year and is expected to deliver capital gains from assets sourced at a discount.
David Forbes-Nixon, chairman and chief executive of Alcentra, says: “Since the global financial crisis in 2008, corporate balance sheets have strengthened and the leverage employed by sub-investment grade corporate borrowers in the United States and Europe has fallen.
“Yet the return on loans at new issue has risen over this period. We believe that lenders today are being paid more for taking less risk.”
Alcentra plans to raise £150m – €10m (£8.6m) of which will be seeded by Alcentra and affiliated companies – and will invest in 60 holdings across 15 industries.
The closed-end investment fund will carry an annual management fee of 0.7% of its net asset value per annum “with no incentive or performance fee”.
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