LONDON (Citywire) - Punter Southall is planning the launch of a closed-ended income fund seeking a 5 percent yield from a portfolio of asset-backed loans.
PSource Structured Debt is to be launched by PSource Capital, part of Punter Southall. It is scheduled to list in London in July with a Guernsey domicile. Management of the fund will be outsourced to Laurus Capital Management in New York.
Laurus will run the fund as mirror of Laurus US Fund which is run by Eugene and David Grin.
The fund is targeting annual returns of 10-15 percent per annum including the 5 percent yield. Laurus provide secured lending to small and micro cap US companies. The existing mandates mean the new fund will be 100 percent invested at launch.
Eugene and David Grin target companies which are seeking a more flexible lender than a bank but have strong management, growth potential and liquid assets to provide as collateral.
It said that the portfolios have strong collateral backing with the loans being 99 percent senior secured.
The fund will target an initial dividend of 5p on an issue price of 100p. It will have a sterling-hedged share class as the investments are all in the United States.
A facility is to be built in to the structure which will force a continuation vote after the second year of the funds’ life if it has either failed to pay its dividend or dropped below a value of 100p per share. The fund has committed to restrict its discount to no more than 5 percent.
The fund will aim to be neutral on gearing though the power to be geared up to 30 percent will be in place for cash management purposes.
The management fee will be 2 percent per annum with a performance fee of 20 percent of total returns with a high water mark that kicks in after a return of 5 percent per annum.
The launch costs are expected to depreciate the 100p to a launch price of 97.75p.
The portfolio at launch will be spread across sectors, with the largest weighting of 17 percent being in energy, followed by environment and technology on 12 percent each.
The trust is being brokered by Winterflood Securities.
c Citywire Financial Publishers Ltd 2007.