SCIO closes Fund II at almost €50m

The European structured credit fund manager SCIO Capital has closed its second fund at less than half its target amount of €100 million.

European structured credit specialist SCIO Capital has closed its Partners Fund II at almost €50 million, executives at the London-headquartered firm confirmed to Private Debt Investor.

The fund closed last Friday at half its original target of €100 million after a large unnamed European institutional investor it had been in talks with for several months opted for an individual managed account. 

“We were in the process of closing the account for the last few months. During that time, one sizable investor decided it wanted a special solution as it had some certain demands that meant it couldn't commit to on a commingled fund,” Joern Czech, partner at the firm, explained. 

Fund II has about ten investors including pension funds and insurance companies mostly from mainland European countries like Germany and Switzerland and some family office investors from the UK.

It is three quarters invested and is expected to be fully invested in the next few weeks, Greg Branch (pictured), chief investment officer at SCIO, told PDI

In March this year, SCIO announced it had increased total assets under management to €250 million following the commitment of three anchor investors in Fund II, all German pension funds, totalling €30 million.

SCIO, founded by Branch and Saul Greenberg who are both former Deutsche Bank structured credit veterans, has achieved average annualised returns of more than 20 percent since the company’s inception in 2009. They started the firm with the aim of taking advantage of the dislocation in the European asset-backed securities market.

“SCIO does a lot of deals off-market and they tend to be bilateral transactions with the banks,” a spokesperson for the firm said earlier in the year.

Regarding rumours that the European Central Bank could introduce an asset backed securities purchase programme in the near future, otherwise known as quantitative easing, Branch opined that although the ECB had not yet announced if and / or what it will do, if it is to happen it would likely buy billions of homogenous SME (small and medium-enterprise) debt. 

SCIO funds have had more of an investment focus on CMBS and CLOs as of late, but Branch said that it is in discussions to launch an SME specific fund to allow investors to participate directly in this sector. 

“If the ECB steps in, it would represent a significant vote of confidence for not only the SME market, but for the European structured credit market overall,” Branch said.