Singapore-based EFA Group, an independent asset manager specialising in credit strategies, has so far corralled $200 million for its debut direct lending vehicle, the EFA Real Economy Income Trust (EFA RET).
EFA RET provides senior secured loans of between $2 million to $20 million to mid-market companies operating within the value chain of sectors focused on the real economy. The lifespan of the fund is six years including a four-year investment period.
The fund reached a first close on $50 million in March last year and has deployed over $100 million in eight deals to date. The fund has distributed the targeted 10 percent net returns per annum to investors since inception.
The firm has reduced the fund’s target size from between $300 million to $500 million to around $250 million and is expected to reach a final close in September this year, according to EFA.
The firm said the reduction in the fund’s target size may lead to an earlier closing, with the team then able to focus on investments. The firm is planning to launch a larger second fund in early 2019.
“As banks continue to shrink their balance sheets, we see an increasing withdrawal of credit availability. Companies in the mid-market segment are most impacted with fewer new deals being financed,” explained Xavier de Nazelle, a portfolio manager of the fund, in a statement. “All of these companies are banked, but an increasing number of their mid-term financing needs tend to fall below banks’ radars.”
The fund lends to existing borrowers from the firm’s two established trade finance funds, tapping into strong relationships built up over the years, according to a statement. The fund supports the growth of these companies.
EFA was established in 2003 and currently provides close to $2 billion of short-term, revolving trade finance loans to over 100 mid-market companies annually through its two trade finance funds.