LCM eyes €1.5bn for whole loan strategy – exclusive

The firm’s strategy is to partner with banks and financial institutions on whole loan investments and is targeting a return between 7% and 9% without leverage.

Credit investment specialist LCM Partners is targeting €1.5 billion for its debut strategic origination whole loan strategy.

Three undisclosed cornerstone investors have indicated that they will commit a minimum of €700 million to the strategy. LCM is expecting to market a commingled fund to other LPs at the beginning of next year, according to a source familiar with the situation.

Titled Strategic Origination and Lending Opportunities (SOLO), the fund will invest in whole loans, serving as a partner with banks and financial institutions on transactions.

It is targeting returns between 7 and 9 percent without leverage.

LCM declined to comment on the SOLO strategy.

The firm also announced recently that it has acquired a portfolio and non-performing loans valued at €3 billion. The portfolio is made up of 400,000 consumer and small and medium-sized business loans originated to borrowers in the UK, Germany, Italy and Spain. The portfolio is a mixture of secured and unsecured loans.

Further details of the transaction were not disclosed.

“This transaction is a great example of how LCM leverages its proprietary data warehouse, developed over the last 18 years. This portfolio is highly diversified, delivers a strong cash yield,” said Adrian Cloake, chief investment officer at LCM.

Established in 1999, LCM specialises in acquiring performing and non-performing consumer debt from financial institutions across Europe. Since the firm was founded it has managed €19.5 billion of loans and achieved an unlevered IRR of 14.89 percent.

Last year, the firm raised €2.5 billion for its third credit opportunities fund. The latest transaction takes deployment to €1.3 billion. “We have a strong pipeline of approximately €11 billion of recievables from across our European markets and we’re successfully achieving both our deployment and return targets,” said Paul Burdell, chief executive of LCM.