Cordiant, a leading emerging market private debt fund manager, has raised US $350 million at the final close of its latest debt fund, the Cordiant Emerging Loan Fund IV (CELF IV).
The fund’s primary focus will be on senior, secured loans issued to emerging market private sector borrowers, with an emphasis on diversification across countries and sectors.
Investors in the fund include insurance companies, pension funds and other provident funds.
CELF IV will allow institutional investors to take advantage of the growing imbalance in the emerging markets between the escalating demand for bank style funding and the shrinking balance sheets of Western banks that used to supply much of this lending.
Explains Bertrand Millot, President and CEO of Cordiant: “As banks in developed economies have become more insular in retreating to their home markets, private debt financing has stepped out of its niche role. It has established itself as a viable alternative to traditional bank financing. The demand for stable financing in developing markets continues to expand as these countries seek to grow and modernize, resulting in attractive opportunities for those with a long-term horizon. ”
Cordiant has developed an extensive pipeline of investments across a broad range of sectors, including infrastructure, manufacturing and financial services. Millot adds: “Our focus is on loans that are backed by high levels of collateral and strong covenants, and benefit from measures that mitigate political risk. In our opinion, the investment opportunities that we are seeing are of the highest quality.”
Cordiant says that investors are seeing private debt as an increasingly mainstream asset helping investors to diversify returns away from bonds and equities.
Says Millot: “The wide range of borrowers who raise money through the private loan market also allows investors to look beyond sectors like oil & gas that tend to dominate the emerging market bond market.”
Loans within the private debt market are typically floating rate (linked to an interest rate index) and, therefore, providing a hedge against interest rate rises.
Source – Cordiant