Exclusive: TCA targets $400m soft close

A decision on an AIM listing for a feeder fund to TCA Global Credit is expected in July.

Miami-based alternative lender TCA Fund Management Group is poised to list a feeder fund for its flagship TCA Global Credit vehicle that will enable the firm to offer investors increased liquidity, founding partner Bob Press told Private Debt Investor. TCA Global Credit has a target capacity of between $400 and $500 million, at which point the firm would soft close the fund.

TCA Global Credit Fund specialises in receivables lending to SMEs primarily in the US, the UK and Canada. The target capacity is driven by a maximum amount of positions that can be operationally handled and the size of the loans the firm makes, usually in the $1 to $5 million range.

The firm is currently awaiting regulatory approval for a feeder fund to TCA Global Credit, which it plans to list on the UK's AIM exchange. 

The application is at an advanced stage with a decision expected sometime in July. If approved, the fund will enjoy the benefit of liquidity on a daily, rather than monthly (30 day) basis, Press said. The planned IPO also aims to raise $25 million, mainly from institutional and retail investors.

TCA Global Credit has raised $200 million since its launch in April 2010, and plans to raise an additional $50 million over the next five months, Press said. About $200 million in capital has been deployed, but due to the short duration of the loans, which can range between six to 18 months, much has been refinanced. “The standard structure is a six month revolving line of credit,” Press explained, adding, “There is great turnover in capital in business due to the constant monetisation of collateral and loans.”

Press said the fund serves a niche in terms of the size of businesses financed and the lack of competition. It’s a space where many of the mainstream banks have pulled back from: above where financing from friends or family and venture lies and below where banks are interested. “Banks and many other non-bank lenders are not as active below $5 million,” Press explained, which is down to a host of reasons including capital requirements, high servicing costs and bank consolidation. Lending activity has become more centralised in the countries the firm lends in, Press noted. 71 percent of investment from the fund has been made in the US, according to Q1 2014 figures.

The fund makes senior secured loans to companies with yearly turnover of about $10 to $40 million. Financing tends to be provided at rates in the teens – above banks but in line with other asset based lending, Press said. Position sizes represent 1 to 2 percent of the portfolio.

There are about 200 investors in TCA Global Credit Fund, comprising mainly high net worth individuals, family offices and fund of funds. The fund targets 6 to 8 percent annual dividend payment to shareholders on a quarterly basis (2 percent per quarter).

TCA has a staff of 18 people in offices in London, Miami and Sydney.