Gii Capital Advisors has launched a new fund that will invest in trade receivables and structured assets collateralised by trade receivables globally.
Speaking to GTR, Gii’s CEO Glenn Inniss says the company has now started a discussion process with a number of investors and expects to start placing funds in Q2 next year.
“In terms of the initial fundraising we are looking for €100mn,” he says. “But it’s an open-ended fund, so certainly our ambition is to take that very quickly up to the billion-plus mark within a couple of years. We have a very significant pipeline of investments.”
Gii Capital Advisors is a subsidiary of Gii Finance Network, a UK-based specialist provider of structured finance programmes to mid-sized and large corporates.
The company’s new Gii Trade Income Fund – a Luxembourg-based fund – has been in the making for more than a year and has now obtained the necessary regulatory licenses.
“We’ve been running structured programmes for a number of years, and as part of that we have a large investment network of banks and non-bank investors that we bring in to fund our programmes,” Inniss says. “That’s a very good way of providing finance – it opens up our clients to a variety of financiers with different risk and asset appetite. But it’s a time-consuming process, so in order to really speed up the investment cycle for the benefit of our clients, we decided to set up an investment fund. We’re experts in structured trade finance, so we’re able to assess the risk of the corporate investment very quickly.”
The advantage for investors, he adds, is that Gii will “sit in the middle, doing the due diligence on behalf of the investors, which saves a lot of time and effort on their side”.
The fund will initially focus on the European corporate market, but its future pipeline spans the globe.
“A lot of the funds will be invested in structured programmes, similar to the types of programmes we are running now through securitisation vehicles. In the future, we will be running some of those through the fund. We will also be looking at lines of credit for other lenders, be that bank or non-bank lenders that are investing in trade receivables. We are also looking to do more in the financial instruments space, so it’s quite a broad investment remit,” he says, adding that the intention is not to replace the existing direct investments that the company is currently doing with a number of institutional investors.
The aim of the fund is to generate low volatility and low correlation returns to general markets.
Inniss notes that trade receivables is a “very attractive asset class as an investment”, pointing to data from the International Chamber of Commerce (ICC) which shows that historical losses attributable to trade finance globally are extremely low. In 2015, the aggregate loss ratio for loans was 0.72%, while the overall loss ratio for documentary credit was 0.17% (0.04% for export LCs and 0.29% for import LCs).
As Gii expands its offerings, it is also growing its personnel. The company recently hired Clint Eastwood, a former trade finance banker at Standard Chartered, with more hires to come “in the not too distant future”.