Legal & General Investment Management (LGIM) has launched a private credit fund on its new alternative investment fund platform in Europe.
The asset manager has unveiled the Short-Term Alternative Finance fund as the first strategy on its Luxembourg-based reserved alternative investment fund (RAIF) platform.
The RAIF platform is expected to appeal to investors as it does not need authorisation from local regulators and can be quickly distributed across the European Union. LGIM is expected to roll out several more funds on the platform this year.
First reported by Citywire today, the new platform enables LGIM to bring alternative funds to qualified European and Asian investors.
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The new fund will invest in a portfolio of private credit assets with less than a year duration. The strategy will have an average investment grade rating, targeting attractive yields and low volatility.
“We’re proud to have launched a second iteration of this fund and to open it up to investors,” said LGIM’s head of private credit Nick Bamber, cited by Citywire.
“Our short-term strategy is a fast-growing area of our business, having deployed over £2bn since 2021. Having grown LGIM’s footprint and product offering in continental Europe for several years, we believe this asset class offers attractive yields, low risk and with a strong pipeline ahead. This makes short term alternative finance a potentially attractive, strategic cash alternative for investors.”
Legal & General is reported to have plans to launch several funds on the RAIF platform this year. These will include funds focused on transition credit, real estate, emerging markets and impact opportunities. They are also likely to feature equity-focused strategies.
It will target a range of institutional investors, such as endowments, family offices and insurance companies.
These investments will generally have a duration of three to six months, with the constant rotation allowing the manager to provide liquidity to investors who need it.
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LGIM’s alternative debt investment team will underwrite transactions for the fund, led by head of alternative debt Matthew Taylor, with Sam Jones as joint fund manager.
“We believe short-dated alternative finance can provide an attractive solution for enhanced returns in comparison to liquidity funds or holding cash. It achieves this with low duration and volatility helping investors to maintain sufficient liquidity with potentially reduced risk when compared to other alternatives,” Taylor said.
Taylor added that there is no other liquidity mechanism currently in place, but the firm may create a credit facility to make it easier to return cash to investors quickly.
He said the fund is able to return 10 per cent of investors’ whole capital in a month, 30 per cent within three months, half within six months and all the capital in a year.
Overall, Legal & General runs more than £18bn of private credit investments and has been focused on international expansion in recent years.
“We have invested heavily in European distribution over last year to 18 months, it’s a big part of the LGIM strategy to internationalise diversify and modernise, and Europe and Asia are the obvious two places to take that strategy,” Bamber said.
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