Discovery Invest launches market-first European credit opportunities fund
In line with its aim to bring new investment opportunities to South African clients, Discovery Invest has launched a market-first credit fund targeting annual returns in Euros of 7% per annum, net of fees and taxes.
The Discovery European Credit Opportunities Fund, managed by Ninety One, is a fund that offers access to a blend of primarily private credit, as well as public credit investments, in European and other global markets.
Since the global financial crisis, due to regulatory pressure, there has been a significant decline in bank lending to small- and medium-sized European companies. This has generated an opportunity for investors to receive highly attractive potential returns by investing in private credit funds as they replace banks and provide loans to these companies.
Kenny Rabson, CEO of Discovery Invest, says there are several benefits to investing in credit as an asset class: “Investments in private credit funds can generate high stable returns and diversify an investment portfolio. Although capital and returns are not guaranteed, these opportunities offer potential attractive expected returns with a lower risk profile than global equities.”
The fund is available as a limited offer on Discovery Invest’s local lump-sum Endowment and will open on 18 October 2021, with a minimum investment value of R200,000.
There is limited capacity for the Discovery European Credit Opportunities Fund, with the offer expiring when capacity runs out, but not later than 24 January 2022 (closing date for subscription). All investments must have forms completed and submitted by 24 January 2022. During the seven-year investment term, there will be no liquidity. This means that clients will not be able to do switches or make withdrawals.
Lei Lei, co-head of European private credit at Ninety One, said: “We are delighted to be partnering with Discovery Invest to give investors access to European private credit. We provide bespoke loans to performing private European companies which are 100% secured against their assets to provide downside protection.
"Our borrowers pay interest on our loans over time and it is these contractual payments that drive our targeted 7% net annual return in Euros for our investors.”