Loan Note: Kartesia’s billion for senior debt; Bantry Bay joint venture lends for change

Kartesia closes its biggest fund yet. Plus: Elliott Advisers launches joint venture, and a surprisingly strong 2020 for venture debt. Here's today's brief for our valued subscribers only.

They said it

“The needs are vast and the clock is ticking. Developing nations are faced with numerous climate-related financial risks. Without a significant overhaul of the current system, green finance will plateau and never reach its full potential”

Jonathan Amacker, corporate fellow at Imperial College Business School, launching a new report on how emerging markets are falling behind in green finance

First look

Kartesia bets big on senior debt
European SME lender Kartesia has closed its biggest fund to date with €1bn of commitments targeting senior debt. Kartesia Senior Opportunities I is the firm’s first dedicated senior debt vehicle and will invest in small and mid-market companies across a range of industries with a focus on high-quality credit profiles. Despite the difficult market conditions that dominated in 2020 the fund has already made 16 investments including several in 2021, thereby indicating the strong demand for senior private debt loans.

Lending in a time of change
Elliott Advisers has teamed up with Bantry Bay to launch a joint venture focused on providing capital to corporates undergoing change.

The venture will invest in businesses across key European and North American geographies to help them navigate through the particularly tricky landscape thrown up by the pandemic.

It will secure loans against both hard and soft assets including property, plant machinery and receivables, and lend businesses up to £100m for uses including shareholder realignment, acquisitions and organic growth.

Essentials

A year of opportunity for venture BDC
Venture lender Trinity Capital said 2020 had been a record year despite the tough market conditions created by the coronavirus.

In its first investor call since its IPO in January, chief executive Steven L Brown said: “During the year, where the sector was expected to struggle, venture capital markets aggregated $156 billion in new deal funding, $290 billion in exits and $73 billion in total fundraising for future investment”.

Trinity itself was able to review $5.5 billion of opportunities and funded $240 million, both records for the firm.

It attributed the unexpected success of 2020 to unfulfilled demand for debt and equipment financing among growth-stage companies owing to the complexity of evaluating risk for such investments. Lenders that lack specialist knowledge of the venture debt sector may struggle to underwrite loans and simply reject them, which has led more to seek help from dedicated venture lenders.

New Private Markets and the sustainability megatrend
“It doesn’t do any good to pay a teacher a pension in 2050 if the earth is scorched and their cost of living has gone through the roof because of climate change.” So said Chris Ailman, chief investment officer of the California State Teachers Retirement System, at a conference last week explaining why sustainability is integral to the pension’s investment activity.

There is a spectrum of sustainability in private markets. At one end is sound management of ESG issues; at the other is purpose-driven impact investment.

It is clear that capital is gravitating towards funds and investments all along that spectrum, and that it is doing so at scale. At PEI Media, the momentum has given us the conviction that this area needs its own information and intelligence source, with its own dedicated journalists and researchers. So please check out New Private Markets, a product that launches today from the PEI Media stable, and get in touch to share your thoughts.

LP watch

Institution: New York State Common Retirement Fund
Headquarters: Albany, US
AUM: $247.7 billion
Allocation to alternatives: 22.6%

New York State Common Retirement Fund has confirmed $464.5 million of commitments to four private debt vehicles, according to the pension’s February monthly transaction report.

The commitments comprised $200 million to FIMI Opportunity VII, €200 million ($234.5 million) to Blantyre Special Situations Fund II, $15 million to Brasa Credit II and $15 million to Mandrake Capital Real Estate Fund.

As part of NYSCRF’s emerging manager programme, both Brasa Capital and Mandrake Capital Partners have received allocations from the pension.

NYSCRF has a 3.0 percent target allocation to private debt that currently stands at 1.7 percent.


Today’s letter was prepared by Andy Thomson with John Bakie and Robin Blumenthal

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