Boutique trade finance company Blackstar Capital has acquired a controlling stake in a New Zealand lender and helped launch a private credit firm in Europe.
Blackstar has increased its stake in New Zealand’s Asset Finance to 70%, a move which gives access to its loan book of NZ$20mn.
It has also teamed up with David Hall of the Philipp Family Office in Switzerland and Morgan Metters, previously of Kimura Capital, UBS and Société Générale, to launch Blackstar Asset Management, a UK-based investment advisor that will focus on providing direct loans, deal participation and niche private fund opportunities. The UK-based vehicle will utilise the deal origination and structuring capacity from elsewhere in the Blackstar stable, including the New Zealand acquisition.
The moves are seen as a way of refocusing the Blackstar service offering after a tough couple of years. The company will now have a capital base and is capable of funding deals off its own book, a capacity it previously lacked.
Blackstar Capital, which specialises in trade finance deal origination and structuring, suspended its Blackstar Commodities Fund in September 2017. The fund had been launched in 2012 with a view to harnessing institutional investor appetite in trade finance as an asset class.
A lack of demand from this market meant the fund had to focus on retail investors. GTR understands the fund had reached a value of around US$6mn by the time Blackstar stopped marketing it towards the end of 2015.
It has been unable to close the fund, however, due to a position on an iron ore stockpile in Mexico, of which it took ownership after the borrower – a small Mexican trader – defaulted on a pre-export finance facility. The company says the default was due to a change in legislation in Mexico. It has been unable to release redemptions to date to the disgruntlement of some who still hold a position in the fund, but is actively pursuing a domestic buyer.
Blackstar Capital’s CEO, Mark Stephens, has hailed the company’s new ventures as “an exciting development”.
“By significantly increasing our stake in Asset Finance, we expand Blackstar Capital’s current portfolio of consumer and business finance, broadening our funding base and strengthening our global presence. Asset Finance will benefit from Blackstar Capital’s experience and expertise in structured lending and deal origination strategies,” Stephens says.
Meanwhile, Metters, now COO of Blackstar Asset Management, says that “from our many conversations with investors in this space, we know their concerns over origination, scale and cash drag. We can help them to solve these problems”.
While no information has been released regarding the financial clout of the asset management vehicle, it’s understood that this will be clarified in the coming weeks.
Blackstar Capital, along with Kimura, for whom Metters previously worked, Barak Fund Management, Scipion Capital and EFA Group, was one of the higher profile trade finance funds to emerge in the wake of the financial crisis.
Regulation around capital holding requirements, as well as the increased reporting requirements around anti-money laundering rules, left many international banks reluctant to fund trade in emerging markets (particularly commodities), perceived as being riskier and more time consuming and costly in which to conduct due diligence.
This led to a new generation of commodity financiers, which were willing to take pieces of the deals banks were not able to fund. In Asia, which has been particularly badly hit by bank retrenchment, funds continue to become more prominent in the trade finance landscape: many western investors are looking to the region for steady returns, in an era of historically low yields.