UK commercial property lender ICG-Longbow has held a first and final close on a £400 million ($673.3 million; €493.5 million) senior debt vehicle, Martin Wheeler (pictured), co-founder and partner, told Private Debt Investor.
The vehicle is a stand-alone senior debt mandate pooling together capital from four investors in a strategy designed to generate an attractive yield relative to the corporate bond markets.
“We are just starting out [on a new vehicle] which is focused on senior debt with the objective of creating a highly defensive investment with predictable returns,” Wheeler said.
“We’ve put together a number of co-investing separate account mandates which directly invest in the underlying loans,” he explained.
Wheeler says the firm is looking to tailor its product to both borrowers’ and investors’ demands.
“We’re working on both sides – looking at borrowers and what they want in terms of financing requirements and opportunities, and joining that up with investors’ requirements through attractive risk adjusted returns. Hence, with the senior debt product, we’re providing investors with what they want – low risk but a higher yield than you can get in the corporate bond markets,” he said.
Investors have to trade off on liquidity but the strategy means that the spread offered is “more than 200 bps higher than equivalent corporate bonds,” Wheeler said.
Borrowers are said to be responding well to the bi-lateral programme: “We can underwrite a senior loan in four to six weeks which creates a lot of differentiation between us and the banks,” Wheeler explained.
ICG-Longbow is an investment manager solely focused on UK commercial property debt, and is 51 percent owned by ICG (Intermediate Capital Group). It has £1.4 billion assets under management with investments across the capital structure including senior, mezzanine and whole loans.
For more on this story, read the upcoming interview with ICG-Longbow’s Wheeler in the Real Estate Supplement, published alongside the June issue of Private Debt Investor.