A South African alternative asset manager has reached a significant milestone, achieving assets under management of over £200 million (R4.5 billion+) in a single investment fund from South African investors.
The fund is focused on the fast-growing UK private debt market and is invested across a diversified portfolio of over 50 loans.
“Demand for Westbrooke Yield Plus has continued unabated, achieving quarter-on-quarter growth in each fundraise this year,” affirms Dino Zuccollo, Head of Investor Solutions at Westbrooke Alternative Asset Management. “Our year-to-date fundraise exceeds £50 million, with the final quarter intake likely to continue this strong momentum on the back of buoyed investor sentiment due to improving global and local economic conditions.”
The fund attracted more than £15 million (over R350 million) in its Q2 2024 fundraise, with investor demand boosting that figure to over £20 million in Q3 (over R460 million), representing 33% quarter-on-quarter growth.
Astute investors have one more opportunity this financial year to benefit from the market-beating risk-adjusted returns offered by Westbrooke Alternative Asset Management’s Yield Plus UK private debt fund as it opens for its fourth quarter fundraise.
“With an almost seven-year track record, the fund continues to provide investors with a high-yielding, fixed-income alternative investment that has consistently achieved a net investor return between 7%-9% per annum in British Pounds Sterling (GBP), which translates into an even stronger return in rands,” adds Zuccollo.
According to Zuccollo, this return is significantly above those currently achieved by comparative cash, bonds and fixed-income investments, which adds to its attractiveness among investors.
Demand for private debt investments is a global trend that continues unabated. In its September 2024 Private Debt report, BlackRock forecasts that assets under management will reach $3.5 trillion as the addressable market grows alongside rising demand for diversification opportunities, and structural shifts in private debt markets and the bank lending environment.
“Private debt investments offer additional benefits, such as increased diversification, lower correlations to listed equivalents and tax efficiencies,” adds Zuccollo.
Within this broader value proposition, the Westbrooke Yield Plus private debt fund provides additional benefits that resonate with investors.
“We embrace a dynamic and proactive approach to improve accessibility while, at the same time, protecting investor capital,” explains Zuccollo.
For instance, by removing the 18-to-36-month lock-in period previously required, Westbrooke addressed a key issue facing private debt investors, namely a lack of liquidity while transforming the fund's risk profile.
Investors can give six months' notice to access their capital in either June or December annually, effectively offering the liquidity benefits of a fixed-term deposit, but with up to a 7%-9% return compared to the average cash and money market return of 3%-5% per annum.
Westbrooke also decided early in the shifting interest cycle to diversify away from the fund's predominantly floating rate structure.
“After starting to write an increasing amount of new loans with fixed rates earlier this year, the fund is well positioned to mitigate the impact of interest rate cuts on investor returns,” continues Zuccollo.
“We also implemented an interest rate floor on floating rate loans where possible, which will maintain the spread rate to meet the fund's cash-plus mandate.”
In addition, Westbrooke enhances the post-tax return for investors by generating income as either a capital gain or dividend, which is more tax efficient.
“Investors looking for an investment that offers an asymmetric risk/return profile to diversify portfolios and earn risk-adjusted cash returns that beat the inflation and interest rate hurdle can secure their allocation in the Q4 2024 fundraise,” concludes Zuccollo.
Westbrooke Yield Plus is marketed to investors in South Africa under a CIPC-approved prospectus. Minimum investment is £100,000.