- Advertisement -
- Advertisement -

Related

Scandinavian Credit Fund I to Wind-Down Amid Redemption Wave

Latest Report

This year’s Alternative Fixed Income report from HedgeNordic explores how institutional investors and asset managers are navigating this new reality, balancing yield and resilience amid shifting credit cycles, structural change, and evolving sources of return.

Stockholm (HedgeNordic) – After a brief suspension of deposits and withdrawals in December to address a surge in redemption requests, Scandinavian Credit Fund I reopened for business on May 12. However, just two weeks later, the team behind the direct lending fund has made the decision to permanently cease the buying and selling of profit-sharing loans and initiate the process of winding down its operations. This step comes in response to another wave of redemption requests.

Since the outbreak of COVID-19 until the recent reopening, the fund had experienced an outflow of nearly two billion Swedish kronor. After being just shy of reaching SEK 5 billion under management before the outbreak, Scandinavian Credit Fund I was overseeing under three billion before the reopening. Following the reopening on May 12, the fund experienced further net outflows of SEK 729 million. These additional outflows have made it “impossible to manage the Fund in a satisfactory manner and in the best interest of the shareholders,” according to the team at Scandinavian Credit Fund I. “In order to ensure equal treatment of all unit owners, the fund has no other option but to wind down the business.”

“In order to ensure equal treatment of all unit owners, the fund has no other option but to wind down the business.”

Scandinavian Credit Fund I has been providing senior secured loans with maturities ranging from three to 48 months to small and mid-sized companies in Scandinavia. As an open-ended fund offering monthly liquidity, there is a liquidity mismatch between the fund’s liquidity terms and its underlying investments. This mismatch became particularly pronounced in March of 2020 as investors sought liquidity amidst the panic induced by the COVID-19 pandemic. With redemption requests amounting to approximately one-fifth of its portfolio, Scandinavian Credit Fund I imposed redemption “gates” in April.

The fund closed for deposits and withdrawals again in December 2022 due to requested early redemptions received during November and December. The closure aimed to free up liquidity to meet the withdrawals, which exceeded both the fund’s liquidity buffer and historical outflows. “The fact that a lack of liquidity affects the fund in the event of large withdrawals has to do with the fact that the fund’s capital is tied up in corporate loans with longer maturities than required to meet the short-term large withdrawals,” explains the team.

Upon reopening the fund in mid-May, the team expressed that new inflows would help deploy capital in an environment offering good long-term investment opportunities. However, they warned that further redemption requests exceeding inflows might force the team to postpone redemptions again or wind down operations. During the fund’s liquidation period, future payouts will be pro rata. This means payouts will occur as the fund receives liquidity from the underlying loans, and each shareholder will receive their percentage share based on their ownership in the fund. All subscription or early redemption forms sumbitted will be left without action due to the liquidation and the requirement for equal treatment of all investors.

Subscribe to HedgeBrev, HedgeNordic’s weekly newsletter, and never miss the latest news!

Our newsletter is sent once a week, every Friday.

Eugeniu Guzun
Eugeniu Guzun
Eugeniu Guzun serves as a data analyst responsible for maintaining and gatekeeping the Nordic Hedge Index, and as a journalist covering the Nordic hedge fund industry for HedgeNordic. Eugeniu completed his Master’s degree at the Stockholm School of Economics in 2018. Write to Eugeniu Guzun at eugene@hedgenordic.com

Latest Articles

Slimmer Nordic Lineup Still Delivers at HFM Awards

Despite the Nordic region featuring a slimmer lineup of nominees at this year’s HFM European Performance Awards compared to previous years, three Nordic managers...

More Equities, Less Diversification for Finnish Pension System

In an effort to safeguard the long-term sustainability of Finland’s pension system amid demographic pressures, new rules for private-sector earnings-related pensions are set to...

Investors Rethink Defense and ESG

Several banks and pension giants still have ESG rules that in practice exclude defense stocks. But new figures reveals that something is happening in...

Active Ownership – The Merchant’s Challenge

By Arne Simensen and Jakob Gravdal at Anchora Capital: In the Dutch Golden Age, Isaac Le Maire, initial largest shareholder in the world's first...

Alcur Caps Subscriptions, Prioritizes Efficient Management

On the back of consistent returns and heightened investor interest, stock-picking boutique Alcur Fonder will introduce a limited subscription mechanism for its flagship hedge...

Combining Expertise for Private Equity Sustainability and Energy Transition

HedgeNordic interviewed Federated Hermes Limited’s Head of Responsibility and EOS, Leon Kamhi, and Principal and Head of Portfolio Strategy and Solutions within Private Equity, Christian...

Allocator Interviews

In-Depth: High Yield

- Advertisement -

Voices

Request for Proposal

- Advertisement -
HedgeNordic
Privacy Overview

This website uses cookies so that we can provide you with the best user experience possible. Cookie information is stored in your browser and performs functions such as recognising you when you return to our website and helping our team to understand which sections of the website you find most interesting and useful.