Stockholm (HedgeNordic) – Direct lending vehicle Scandinavian Credit Fund I temporarily suspended deposits and withdrawals in December to address the challenge posed by the illiquid nature of its investments and the influx of redemption requests received during November and December. By repaying the requested redemptions after the repayment of underlying loans in the first quarter, Scandinavian Credit Fund I has been reopened for deposits and withdrawals as of May 12.
Managed by Stockholm-based asset manager KredFin, Scandinavian Credit Fund I provides senior secured loans with maturities from three to 48 months to small and mid-sized companies in Scandinavia. Since the direct lending fund is an open-ended vehicle offering monthly liquidity, there is some mismatch between the fund’s liquidity terms and the liquidity of its underlying investments. This liquidity mismatch became particularly pronounced in March of 2020 as investors sought liquidity amidst the panic induced by the COVID-19 pandemic.
“Since the outbreak of COVID-19, the fund has had an outflow of nearly two billion. Just before the outbreak, the fund reached close to five billion in assets under management…”
“Since the outbreak of COVID-19, the fund has had an outflow of nearly two billion Swedish kronor. Just before the outbreak, the fund reached close to five billion in assets under management and is down to just under three billion today,” writes the team at Scandinavian Credit Fund I in a note to investors. In connection with the fund’s reopening, the window for new redemption requests has been extended from May 15 to May 26, which corresponds to the last day for the subscription of new fund units. The extension will help the team running the fund get a better understanding of anticipated inflows and outflows.
A new wave of inflows will help the team led by head of investment Andreas Konstantino (pictured) deploy capital in an environment that offers “good opportunities to do new business for the long-term investor.” With The fund’s portfolio of underlying investments consisting of loan receivables with an average term of approximately two years, further redemption requests that exceed inflows may force the team to postpone redemptions again or even wind down operations. “Further redemption requests may result in the fund ending up in a situation where it is forced to postpone redemptions or even wind down operations to protect all investors in the fund,” according to the team at KredFin.