Portfolio Update

RNS Number : 3626A

Fair Oaks Income Fund Limited

22 December 2014

 



Fair Oaks Income Fund Limited

22 December 2014

FAIR OAKS INCOME FUND LIMITED (the "Company")

(Incorporated in Guernsey under The Companies (Guernsey) Law, 2008, as amended, with registered number 58123 and registered as a Registered Closed-ended Collective Investment Scheme with the Guernsey Financial Services Commission)

Portfolio Update

Fair Oaks Income Fund Limited (the "Company") is pleased to announce that Fair Oaks Income Fund LP (the "Master Fund") has exercised its right as majority holder of the Income Notes in T2 Income Fund CLO I Ltd ("T2 CLO") to optionally redeem all of the notes of T2 CLO. The liquidation of the remaining assets in T2 CLO is well underway with the vast majority of assets sold in mid-November, ahead of the recent market weakness. The redemption will be effective on T2 CLO's next payment date, 15th January 2015 (see Note 1).  The expected proceeds to the Master Fund are in excess of its current carrying value and the Master Fund's expected annualised total return from its investment in T2 CLO is 19.0%.

The Company is also pleased to announce that the Master Fund has committed to acquire, in the primary market, $21 million notional of equity notes, representing 55% of the total equity of Allegro CLO II Ltd., a new CLO backed by a portfolio of US broadly syndicated, secured loans. The transaction is scheduled to close on 21^st January 2015.

The manager of Allegro CLO II Ltd. is Axa Investment Managers, Inc. ("Axa IM").  The Axa IM Group is one of the Axa Group's principal asset managers and has assets under management of $582 billion. The CLO's current target portfolio has a principal value of $400 million across an expected 120 unique bank loan issuers, with an expected weighted average exposure per issuer of approximately 0.9%.

The potential total return for the investment in Allegro CLO II Ltd., as estimated by the general partner of the Master Fund (the "General Partner"), is between 15% and 18% per annum (see Note 2).

Pro-forma following the redemption of T2 CLO and investment in Allegro CLO II Ltd., the Master Fund's portfolio is estimated to provide broadly diversified exposure to over 770 unique bank loan issuers, with a weighted average exposure per issuer estimated at 0.2%. The top 10 issuers represent an estimated 6.1% exposure and the portfolio is diversified across 40 industries. Approximately 94% of the underlying loans in the Master Fund's CLO investments are to US issuers, 4% to issuers domiciled in the UK, Germany, France and the Netherlands and less than 1% are to other European issuers (see Note 3). 

Enquiries:

Fair Oaks Income Fund Limited

Email: [e-mail]

Web: www.fairoaksincomefund.com

Fair Oaks Capital Limited

Roger Coyle

DDI: [phone]

Email: [e-mail]

Praxis Fund Services Limited

Ben Le Prevost

DDI: [phone]

Email: [e-mail]

Camarco

Edward Gascoigne-Pees

Hazel Stevenson

DDI: [phone]

Email:  [e-mail] / [e-mail]

Numis Securities Limited

Nathan Brown, Corporate Broking

DDI: [phone]

Email: [e-mail] 

Fair Oaks Income Fund Limited

Fair Oaks Income Fund Limited is an authorised closed-ended investment company incorporated in Guernsey. The Company was admitted to trading on the Specialist Fund Market of the London Stock Exchange on 12 June 2014. The Company's ordinary shares have the TIDM: FAIR and ISIN: GG00BMBN1D14.

The investment policy of the Company is to seek exposure to US and European CLOs or other vehicles and structures which provide exposure to portfolios consisting primarily of US and European floating-rate senior secured loans and which may include non-recourse financing. The Company will implement its investment policy by investing in Fair Oaks Income Fund LP (the "Master Fund").

The investment objective of the Company is to generate attractive, risk-adjusted returns, principally through income distributions. On the basis of market conditions as at the date of its prospectus, and based on the $1 per share issue price, the Company is targeting a net total return of between 12 and 14 per cent. per annum over the planned life of the Master Fund, including a dividend of (a) in its first year of an amount at least equal to 5.0 per cent. of the $1 per share issue price; and (b) in respect of each year thereafter, 3 month USD Libor plus 6.75 per cent. of the issue price (or an annualised equivalent in each case) (see Note 1).

Notes

1) Depending on the timing of the sale and settlement of a limited number of the remaining assets in T2 CLO, a portion of the expected proceeds to the Master Fund may be received after the 15 January 2015 liquidation date and a limited number of assets may be received by the Master Fund in specie.

2) The General Partner's estimate of the potential total return for this investment in calculated across certain scenarios and subject to certain assumptions. This and any other references herein to potential future returns or distributions are targets and not forecasts and there can be no guarantee or assurance that they will be achieved.

3) Based on gross par portfolios and weighted by percentage ownership of notional tranche and NAV/cash

4) This document is for information purposes only and is not an offer to invest. All investments are subject to risk. Past performance is no guarantee of future returns. Prospective  investors are  advised  to seek  expert  legal, financial, tax  and other  professional advice  before making  any  investment decisions. 

 

END

 

 

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