Investec: Attractive Closed End Funds Discounts Gives Rise To Latest Lending Proposition

The launch of Investec Fund Finance's latest Lending Proposition is good news for Fund Managers looking for 'Event Driven Financing' in the closed end fund space. End Quote

(1888PressRelease) May 28, 2011 - Investec offers specialised lending for deals in the closed-end funds market

- Investec believes many closed-end funds are trading at attractive discounts to their net asset values (NAVs)
- Consolidation is expected in the closed-end fund space
- Investec's lending is expected to be concentrated around funds focusing on alternative asset classes

Investec Specialist Private Bank ('Investec') has launched a new lending proposition for fund managers looking for 'event driven financing' focused on the closed-end fund space. This includes financing mergers; the acquisition of strategic shareholdings; help in restructuring a fund's balance sheet; or M&A activity at the fund manager level.

The service, which will be provided by the bank's Fund Finance team, is aimed at fund managers looking for capital to facilitate deals across Europe, but specifically for the UK market.

The finance provided by Investec will not be invested in the closed-end funds they are linked to, but will be used to create value through structural change at the investor and fund manager level.

Investec says the financial crisis and volatility in the markets has resulted in some closed-end funds trading at significant discounts to the tangible value of their underlying assets. The bank will consider lending to fund managers looking to take advantage of this to create further value through, for example, an acquisition of a closed-end fund.

David Drewienka of Investec's Fund Finance said: "Many of the smaller closed-end funds are less well researched and do not have the critical mass to be commercially viable. This, coupled with the fact that a number are trading at attractive discounts to their tangible net worth, means there are some attractive structural investment opportunities in this market through, for example, facilitating amalgamation and creating economies of scale.

"We will listen to any fund manager looking for finance to take advantage of this opportunity, but we need to be convinced that they have a strong track record in creating value in the area they specialise in. We will run a thorough due diligence process on any proposed deal before deciding on whether or not to lend."

Investec's most recent deal in this area was to provide funding to Greenwich Loan Income Fund Limited, a Guernsey-based listed fund which primarily invests in senior secured loans, to acquire Asset Management Investment Company to create a larger closed-end fund with gross assets of just under £200 million. The acquisition was completed at the beginning of February 2011.

Geoff Miller, Chairman of Greenwich Loan Income Fund Limited said: "We have a good track record and it made sense for us to acquire Asset Management Investment Company. We have now been admitted to the Official List of the Channel Islands Stock Exchange and we continue to trade on AIM, where our share price has increased by 35%, from 28p to 38p, since the deal was initially announced in October 2010."

"Investec has a good understanding of our industry, which meant that they could see the merit of our ambitions. We are now in a stronger position to deliver a more stable and predictable dividend yield."

Investec expects to primarily support deals involving closed-end funds focusing on alternative asset classes and other specialist investment areas. This is because many strategies here are strong growth areas, difficult to copy, and generally represent the best opportunities for creating value.

Before lending, Investec needs to be convinced that any proposed deal represents a real opportunity for creating value. The Fund Finance team also needs to be confident that the fund manager has a strong track record of consistently creating value in a particular specialist area where they are looking for funding. As part of Investec's due diligence process, it will also look at the fund manager's relationship with regulators, who their external auditor and legal advisors are; the background and experience of the key people requesting the funding, and the fund's custody and independent valuation arrangements.

Drewienka continues: "There will be significant consolidation in the fund management industry, and in particular amongst closed-end funds. This will result in a number of opportunities for creating value through structural changes, and we are keen to participate in this by supporting the right fund managers who are looking for funding to take advantage of this."

For further information on Investec's new Fund Finance proposition, please call David Drewienka or visit www.investecspb.co.uk/fundfinance

For further information please contact:
Investec Private Bank
David Drewienka 02075974558
Helen Park-Weir 020 7597 4208

Citigate Dewe Rogerson 020 7638 9571
Phil Anderson
Georgiana Brunner

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