ICG-Longbow has raised £104.6m for its Senior Secured UK Property Debt Investments Limited debt fund through a main market IPO listing, with investments spread from a range of institutional investors and via wealth managers.
Investec Bank was adviser and bookrunner, supported by ICG-Longbow, a 51% subsidiary of Intermediate Capital Group.
Starwood Capital Group, the global private equity real estate firm, raised £228.5m through an initial public offering for its inaugural European real estate debt listed vehicle in mid-December, prompting both ICG-Longbow and Cheyne Capital Management to delay their listings.
Although the three funds have different strategies, each were seeking investments from a similar investor universe, there was thought to be too much congestion at the same time. Cheyne has postponed its senior debt IPO until later in the first quarter.
ICG-Longbow SSUP will provide senior secured loans to assist in the acquisition and refinancing of commercial property across the UK.
ICG-Longbow investment objective for the listed fund will be to construct a portfolio of good quality, defensive senior debt investments secured by first ranking fixed charges against UK commercial property investments, providing dividends of circa 6% per annum, paid quarterly achieved from a target portfolio IRR of 8% per annum.
Some exposure to UK investment residential property will also be permitted as part of the fund’s potential investment universe, with individual loans at between £10m and £40m at durations of four to six years. The portfolio will target a 6.5% to 7.5% per annum loan coupon.
The company will aim to be fully invested within six to nine months with a target year-one dividend of 4 to 5%.
Thecompany has appointed ICG- Longbow Real Estate Capital LLP as the investment manager. The investment strategy and loan origination within ICG-Longbow is being led by former NAMA head of lending Graham Emmett.
Jack Perry, chairman of ICG-Longbow SSUP, said: “Raising over £100m in what is currently a very difficult fund raising environment is a great achievement. The success is a testament to the experienced ICG-Longbow team and the design of the product. A 6% pa dividend yield from a diversified senior loan portfolio is attractive and there has been significant demand from investors looking to diversify their portfolios into new investment opportunities.
“We are currently seeing a significant shortfall in the supply of senior debt to the UK commercial property sector. We are delighted to offer investors an opportunity to participate directly in newly originated senior loans, underpinned by attractive credit fundamentals. These features should combine to result in predictable investor returns.”