Appointment of Investment Manager

RNS Number : 1817P

SQN Asset Finance Income Fund Ltd

08 June 2020

 

8 June 2020

SQN Asset Finance Income Fund Limited

LEI: 2138007S3YRY3IUU4W39

Appointment of Investment Manager

The Board of SQN Asset Finance Income Fund Limited (the "Company") is pleased to announce the appointment of KKV Investment Management Ltd ("KKV") as portfolio manager of the Company and the appointment of International Fund Management Limited ("IFM") as the Company's AIFM.

Appointment of KKV

KKV is a newly formed investment management company, majority owned by Kvika Securities Ltd ("KSL"), the UK operating subsidiary of Kvika Banki hf. ("Kvika Banki"), a Nordic publicly traded commercial bank focusing on asset management and investment services. The investment team at KKV will be led by Dawn Kendall as CIO, supported by Chris Greener and Christian Holder, both of whom are experienced credit managers who have recently joined KKV. The majority of the operational personnel of SQN UK have also joined KKV, providing continuity to the Company's operations, relationships with its borrowers and knowledge of its investment portfolio.

KKV offers a strong proposal which combines the expertise and considerable experience of individuals previously within the SQN Group with a newly recruited team of financial services professionals with significant expertise in the fields of credit and risk.  Together with the infrastructure and governance associated with Kvika banki and KSL, the Board believes this proposition delivers the continuity and enhanced fund management skills expected by Shareholders.

Ken Hillen, Executive Chairman of KKV

Ken Hillen has joined KKV as Executive Chairman and will take a significant leadership role within the organisation.  Ken has held a number of senior banking roles throughout his career: including senior corporate director at RBS, managing director for Scotland and Northern Ireland at Anglo Irish Bank and head of commercial and corporate banking for Scotland at Bank of Ireland.  Ken has a broad experience of non-executive and consultancy roles within financial services and other sectors. His current non-executive roles require regular dialogue with a number of private equity houses and banks. He holds positions in both listed and private companies.  Ken has significant experience of managing complex lending relationships and corporate loans. At one point he had responsibility for a loan book of c.£2.0 billion ranging across a number of sectors and jurisdictions. He also has considerable restructuring and insolvency experience.  Ken will chair the Board and the management committee of KKV with the CIO and the COO reporting to him.

Dawn Kendall, Chief Investment Officer and Director, KKV

Dawn has 34 years' experience in financial services, including 25 years' experience managing fixed income portfolios for financial institutions, including her role as Partner and Portfolio Manager at TwentyFour Asset Management, as CIO for IAM, a fund of hedge funds, and Portfolio Manager for The Codelouf Trust, a family office. Additionally, Dawn has held senior investment and management positions at Newton, Axa (Architas) and Investec Wealth. She began her career with SG Warburg where she worked as a risk manager.  Her areas of specialism are fixed income portfolio management for private and public debt, structured finance, product development and derivatives.  Since 2017, in her capacity as investment manager, she has led the successful turnaround of the SME Loan Fund which became the SQN Secured Income Fund plc.  Dawn has a degree in Law and earned her MBA in 2004.

Gunnar Sigurdsson, Director, KKV and Managing Director of KSL

Gunnar Sigurdsson has 25 years of experience in the financial industry, ranging from commercial and investment banking to private equity, in Europe and the United States.  Gunnar has significant transaction and structuring experience, having led many large and complex acquisition and advisory projects as well as building and managing the portfolio management arm of a major private equity operation, based in London.  Gunnar has been a member of the boards of directors of several companies, including major UK retailing and wholesaling companies such as Iceland Foods and House of Fraser. Gunnar spent 10 years in the USA in the 90s, where he obtained his MBA degree from Pennsylvania State University and worked for several years for Bank One (now JP Morgan). Gunnar has been based in the UK for the better part of the last 16 years and is now responsible for leading the UK operations of Kvika Banki.

Helgi Bergs, Director, KKV

Helgi Bergs has over 20 years of experience in the financial industry, ranging from commercial and investment banking to private equity and distressed debt.  Helgi has significant transaction, structuring and advisory experience, having led many large complex structuring and advisory projects.  Helgi has previously overseen large principle investment portfolios (>€700m) and has a proven track record of raising funds in the private equity space. Helgi has previously been a member of the boards of directors of several companies including ADP and Phase Eight. Helgi joined the Kvika team in London in 2017. Helgi is the Managing Director of Kvika Advisory Ltd., which is a subsidiary of KSL.

Ragnar Dyer, Director, KKV

Ragnar Dyer joined the Kvika Group in 2010 and was appointed Managing Director of Jupiter Capital Management in 2013. He was then appointed Managing Director of Finance and Operations at Kvika banki in 2019. Ragnar started his career in the financial sector in 2007. Before that he served as a fund manager and a partner of Teton Investments and at Straumur Investment bank as a broker and specialist in interest rates and derivatives. Ragnar has completed the Stanford Executive Program from Stanford University, holds a B.Sc. degree in Engineering Management from the University of Reykjavík and is a certified securities broker in Iceland.

Ariel Vegoda, Director, KKV

Ariel is a qualified lawyer and an operational expert with over a decade's experience of transaction negotiation, deal execution and complex work outs of transactions. Alongside that, he is also a highly skilled litigator having specialised in commercial litigation, asset recovery and dispute resolution whilst at Mishcon de Reya, prior to assuming the role of General Counsel of SQN UK in 2015 and the additional role of Chief Operating Officer of SQN UK in 2019. In this role, Ariel has been heavily involved in assisting with work out situations in the Company's portfolio. Ariel will work with KKV as a consultant on an interim basis to ensure continuity alongside the broader operational team from SQN UK.

Chris Greener, Investment Manager, KKV

Chris has been a credit professional for 22 years.  He founded White Circle in 2017 and prior to this he spent two years as a Director of several developing businesses with a focus on SME and consumer finance.  He assisted these businesses in accessing debt and equity capital as well as seeking out new lending and investment opportunities.  From 2008 to 2014, he managed over €8bn of European asset backed credit at BlackRock and under his tenure, the asset backed team provided strong returns in the flagship European multi-strategy fixed income fund.

Prior to joining BlackRock, Chris was a Director responsible for covering asset backed credit in Europe and Asia with Société Générale. Before that he worked at RBS and UBS where he began his career in 1998.  Chris earned his BSc Mathematics from Imperial College, London.

Christian Holder, Investment Manager, KKV

Prior to founding White Circle in 2017, Christian worked at Jupiter Asset Management as a senior credit analyst covering securitised and corporate credit.  He worked at BlackRock for over 11 years until 2015 with his last role as lead investment manager in the European asset backed credit team. His expertise in private equity backed deals created significant alpha across the platform.  Between 1996-2004 he worked at Fitch Ratings, most recently in the asset backed credit team after working as an accountant. Within the asset backed team, he worked in the consumer ABS and RMBS monitoring team, before becoming lead credit analyst in the Whole Business Securitisation team. The role involved analysis of large property and operating asset portfolios in the leisure, care home and utility sectors.  Christian is a CIMA qualified accountant and has a BA in Geography from Salford University.

Both Chris Greener and Christian Holder have assumed their roles, reporting to the CIO, as of the transfer date.

KKV has also recruited a highly experienced executive with significant operational, regulatory and risk management capabilities who is expected to join KKV in Q3, 2020.  Further details of this appointment will be announced in due course.

International Fund Management Limited

The Board has also appointed IFM, part of the PraxisIFM Group listed on The International Stock Exchange, as the Company's AIFM. IFM is a full service AIFM with over US$5 billion assets under management with experience across all major asset classes, including credit, and provides services to multiple investment trust and investment company clients listed on the main market of the London Stock Exchange.  IFM, as AIFM, will be responsible to the Company for risk management and portfolio management and will delegate the provision of portfolio management services to KKV.

The fees associated with the ongoing appointment of IFM will be met by KKV.

Key Terms of the New Investment Management Agreement

Management Fees

The Company has agreed that initially KKV will receive fees on the same basis as the fees previously payable to SQN Capital, being 1.0% on the first £300m of Net Asset Value ("NAV"), 0.9% on the next £200m of NAV and 0.8% for any NAV over £500m.  

In the event that the 2020 Continuation Vote passes for either or both Share Classes, that fee basis would continue thereafter for the respective Share Class ("Continuation Fee").  If both Share Classes vote in favour of continuation, the Continuation Fee would continue to be apportioned pro-rata between the Ordinary Shares and the C Shares on the basis of NAV.

In the event that the 2020 Continuation Vote does not pass for either Share Class, an alternative fee basis would be adopted for any Share Class that is placed into managed wind-down ("Wind-Down Fee"), with effect from 1 July 2020, and the fees would be applied to each Share Class independently.

The Wind-Down Fee would be calculated on the following basis:

· The assets in the portfolio that are classified as Stage 1 under IFRS 9 as at 31 March 2020, would be subject to a management fee of 1.0% of the carrying value per annum; and

· The assets in the portfolio that are classified as Stage 2 or Stage 3 under IFRS 9 as at 31 March 2020, would be subject to a management fee of 0.75% of the carrying value per annum plus a performance fee of 10% of any net capital gains on realisations of such assets during each financial year.

The total fees payable by each Share Class would be capped at 1.0% of the average NAV for the financial year of that Share Class, with any excess performance fee being carried forward and which may be offset by the Company against any net capital losses on realisations in the following financial year.

KKV has committed to use 5% of the management fees it receives in respect of each Share Class to buy the Shares of that class in the market, and undertaken not to dispose of such Shares for a period of at least two years from the date of acquisition, without the prior written consent of the Company.

The Company will not incur any duplication of investment and portfolio management fees as a result of the transition to KKV. However, in the event that the Company served notice on KKV within the first 36 months of the date of the agreement, the Company would be required to reimburse KKV for certain costs that the Company would otherwise have incurred in connection with the transfer of the management contract to KKV, with such amount decreasing over time.

Termination provisions

The new investment management agreement will be terminable by either the Company or KKV serving at least 12 months' notice. There is no minimum initial term.

Extraordinary General Meeting

The Company will shortly publish a circular to convene an Extraordinary General Meeting ("EGM"), as well separate class meetings for holders of Ordinary Shares and C Shares, in connection with the 2020 Continuation Vote, as announced on 30 April 2020.

At the EGM, the Board intends to propose that the Company be renamed KKV Secured Loan Fund Limited. In addition, following the EGM, the Ordinary Share ticker will change to 'KKVL' and the C Share ticker will change to 'KKVX'.

The Company's new website following the appointment of KKV can be found here: https://kkvim.com/sqn-asset-finance-income-fund

Terms used in this announcement shall, unless the context otherwise requires, bear the meanings given to them in the "Conclusion of Strategic Review and Change of Investment Manager" RNS released by the Company on 30 April 2020.

For further information please contact:

SQN Asset Finance Income Fund Limited Peter Niven	(via the Company Secretary)
KKV Investment Management Ltd Catherine Halford Riera Nicola Bird	0207 429 2200
BNP Paribas Securities Services S.C.A., Guernsey Branch Company Secretary	01481 750 853
Winterflood Securities Limited Neil Langford	020 3100 0000
Buchanan Charles Ryland Henry Wilson	020 7466 5000
Prosek (PR for KKV) Fiona Laffan Clare Glynn	[e-mail]

Cautionary statements

This announcement may contain and the Company may make verbal statements containing "forward-looking statements" with respect to certain of the Company's plans and its current goals and expectations relating to its future financial condition, performance, strategic initiatives, objectives and results. Forward-looking statements sometimes use words such as "aim", "anticipate", "target", "expect", "estimate", "intend", "plan", "goal", "believe", "seek", "may", "could", "outlook" or other words of similar meaning. By their nature, all forward-looking statements involve risk and uncertainty because they relate to future events and circumstances which are beyond the control of the Company.

As a result, the actual future financial condition, performance and results of the Company may differ

materially from the plans, goals and expectations set forth in any forward-looking statements. Any

forward-looking statements made in this announcement by or on behalf of the Company speak only as of the date they are made. The information contained in this announcement is subject to change

without notice and except as required by applicable law or regulation, the Company expressly disclaims any obligation or undertaking to publish any updates or revisions to any forward-looking statements contained in this announcement to reflect any changes in the Company's expectations with regard thereto or any changes in events, conditions or circumstances on which any such statements are based.

Neither the content of the Company's website (or any other website) nor the content of any website

accessible from hyperlinks on the Company's website (or any other website) is incorporated into or

forms part of this announcement.

 

END

 

 

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