Irish Stockbroker Woos Investors With New Leveraged Credit Fund

Robert Lee, Tax-news.com, London

08 February 2001

According to Ireland's Sunday Business Post, Irish stockbroker Dolmen Securities has launched the country's first Leveraged Credit and Asset Management operation, a US$500m leverage fund which will be accessible to both institutional and private clients of the firm.

According to Dolmen's Max Doyle, the fund will be made up of around 5 per cent equity and 95 per cent securitised debt. Dolmen, a subsidiary of German insurer Ergo, is hoping for a significant level of interest in the fund, which will tie up any investment for three years but offers a predictable return for investors of around 15% to 20% per annum. Returns should come about after approximately four years, as the returns on securitised debt begin to fall after three years once the debt has to be repaid.

Whilst the returns may be in the region of 20%, Mr Doyle said investing in the fund was not without risk: 'The two biggest risks are default and recovery of loan to a defaulted company,' he explained. The fund will invest in high grade corporate bonds only and not any high yield and high risk bonds.

Mr Doyle added that the fund will be a relatively new concept in the Irish market but he thinks investors will be attracted to it: 'The collateralised management business is enormous in the US which is a much more developed market so we expect it will interest more and more investors here as people become more familiar with the product,' he said.

.

Recommended

Write a comment