Specialist debt manager expands adviser offering
CIP Asset Management (CIPAM) has launched a wholesale version of its highly successful CIPAM Multi-Sector Private Lending Fund. The launch provides the opportunity for wholesale and sophisticated individual investors to access a truly unique offering. It’s another expansion into the non-institutional market after the launch of the multi-asset Credit Income Fund in 2020.
CIPAM says the fund is “a floating-rate, multi-sector credit strategy focused on private lending opportunities primarily in Australia and New Zealand, which include corporate loans, commercial real estate debt and asset-backed securities.”
The fund is looking to achieve an absolute return of 5% above its benchmark, the Bloomberg Ausbond Bank Bill Index, after fees. “The institutional (Class I) version of the fund has achieved this target to date with a one-year return of 8.35% and an annualised return since inception of 6.21% as at 31 May 2021.”
The team at CIPAM targets a “consistent, high level of income by harvesting the illiquidity premium that exists in private lending markets. By keeping spread duration low and focusing on floating-rate loans, the fund aims to have a low correlation to interest rates and broader equity markets,” the manager says.
Following the banking and super Royal Commission, lending became more expensive and difficult for the big banks to lend. This created opportunities for non-bank lenders to offer businesses and consumers financing options that were previously only open to large corporations. Of the sources of non-bank finance available, there are credit funds, followed by private equity firms with a direct lending arms, junior debt funds and asset-backed lenders. From an investor’s perspective, they have now access to investment opportunities that were previously limited to the banks.
CIPAM’s head of investment strategy, Pete Robinson said “If the current environment persists, we see significant opportunities in domestic private markets, which currently boast very attractive illiquidity premiums. We believe they will continue to outperform the increasingly expensive public markets”. CIPAM has more than 15 years’ experience in the business, with over $10 billion in private credit loans. Its low default rate is a reflection of the well-established processes it has built across the business.
The fund is only available to institutional and wholesale investors (as defined by the Corporations Act 2001).