We have pioneered a highly scalable and innovative transaction by executing a structured forward flow of capital call facilities, in the first transaction of its kind in Europe.

Client Challenge

• A&M was retained by Investec (JSE/FTSE 250) to act as the lead sell-side advisor in the construction of a forward flow agreement to support continued growth with its client base and new originations.
• Investec have originated over £25bn of originations in 12 years of operation within the funds finance space, offering capital call facilities, NAV financing, GP Financing and Secondary fund leverage solutions.
• Since establishing its fund finance business in 2008, the team have originated over 1,000 facilities for a total original principal amount in excess of £25bn, with zero defaults and no capital losses.
• Given the size of the Investec balance sheet relative to the borrowing needs of clients, the bank’s team had already developed a track record of distributing exposure both to banks and institutions, facilitated by their syndicated fund finance desk.
• As annual originations grew in excess of £7bn however, Investec sought to introduce several committed institutional partners to facilitate its ability to scale existing relationships in a programmatic way, thereby fully complimenting and coexisting with its existing syndication distribution channel.

A&M’s Solution and Approach

• A business and portfolio assessment process was used to help drive decisions on transaction format, selection of prospective financing partners and all ramifications.
• Collaborative discussions were held with a variety of parties interested in various formats of forward flow agreements, each of which aimed to resolve Investec’s constraints in different ways.
• The executed Project Infuse transaction was a forward flow into a de novo SPV that transacted a private cash warehouse securitisation of capital call facilities.
• Senior and mezzanine investors invested in the respective note classes issued by a de novo SPV, while the equity was retained by the global asset manager.
• The final transaction represents the culmination of a comprehensive transformation journey for Investec that introduced a scalable counterparty to match its growth.

Highly Scalable Innovative Transaction Features

• The transaction was structured with capital call facilities, which had historically not been used in cash securitisation format.
• Through the combination of senior and mezzanine investment, the global asset manager has significant scale to accompany Investec’s growth into the medium term.
• A&M worked closely with the company’s teams:
• Ensuring adherence to requirements driven by regulation (including large exposure and SRT frameworks) as well as best practice in the market.
• Helping the client manage a strategic pivot in business model and manage the transaction effectively in the long term.
• This complex and unusual transaction illustrates the benefits of an advisor who brings both wide investor contacts and deep understanding of their specific risk appetites.

Quotes from the Client

• “We are pleased to announce the expansion of our fund solutions lending facilities by partnering with Ares. This innovative structure is scalable and helps rapidly grow our client-led approach to financing. Our shared focus on innovation provides a solid foundation for a long-term relationship with the potential to scale Ares’ commitment over time. We look forward to further developing our offering and providing additional value to the market with the resources this brings.” - Grant Crosby, managing director, fund solutions at Investec
   
• “We are delighted to support Investec’s fund solutions team as they continue to expand their lending capabilities and footprint across the UK and Europe. This transaction highlights our combined strengths, matching our flexible capital with Investec’s well established financing platform. This also underscores the strength of Ares’ differentiated ability to provide consistent fund solutions as demand for liquidity continues to outpace supply. We look forward to working with Investec as we continue to develop innovative solutions in the fund finance market.” - Richard Sehayek, Managing Director of Ares Alternative Credit

Quote from A&M

• "We are very pleased to have been able to assist Investec in adapting and scaling its business for the changing needs of the sector, ensuring it remains at the forefront of innovative developments for its client base." Robert Bradbury, Head of Structured Credit