EFA Group, an independent asset manager specialising in credit strategies, has reached a first close of $50 million on a new direct lending vehicle, the EFA Real Economy Income Trust (EFA RET). The new fund is targeting up to $300 million-$500 million.
The closed-ended credit fund, which reached its first close in less than six months, is eyeing a 10 percent net annual return, to be distributed semi-annually. It will provide senior secured loans of $2 million-$20 million to mid-market companies operating within the value chain of sectors focused on the real economy. The lifespan of the fund is six years including a four-year investment period.
“As banks continue to shrink their balance sheets, we see an increasing withdrawal of credit availability. Companies in the mid-market segment are most impacted with fewer new deals being financed,” explained Xavier de Nazelle, portfolio manager of EFA RET in a statement. “All of these companies are banked, but an increasing number of their mid-term financing needs tend to fall below banks’ radars.”
The manager anticipates four rounds of fundraising reaching a final close within the next 24 months. The fund will start investing the capital next month, and will begin the second round of fundraising when the initial commitments are fully deployed.
The fund will lend to existing borrowers of the firm’s two established trade finance funds, tapping into strong relationships built up over the years, according to the statement. The new fund will further support the growth of these companies.
EFA was established in 2003 and currently provides close to $2 billion of short-term, revolving trade finance loans to over 100 mid-market companies annually through its two established trade finance funds.