P&G Sgran Italian asset management boutique, launches the “Zoo5” closed-end fund, which follows a new strategy to seize a specific alpha opportunity on the CLO (Collateralized Loan Obligation) market, which represent public securitization transactions with corporate loans as underlying medium-large companies with high levels of debt.
In particular, the fund invests in triple-A rated European CLOsinstruments that currently offer consistent returns, equal on average to the Euribor rate plus about 200 basis points (for a total of about 4.5%-5%) against high liquidity and contained risks.
Possible second cloding in January 2023
P&G Sgr has specifically created a closed and reserved Alternative Investment Fund (FIA) under Italian law, which has already closed the first subscription period and will build a CLO portfolio of approximately 60 million euro. If market conditions remain unchanged, the fund could make a second closing in January 2023, to bring the target portfolio at 100 million euro.
The fund makes use of financial leverage to optimize returns, using in particular the REPO tool (or “repurchase agreements”), combined with constant risk control and management in order to preserve the capital employed and enhance the asymmetry market in the evaluation of these instruments. Thanks to this process, Zoo5 aims to obtain a double-digit return over 5 years of expected duration.
The “Zoo” Series
The new fund is part of the “Zoo” series, a family of structured finance vehicles launched by P&G Sgr in the early 2000s.
“Zoo5 was created with the aim of exploiting a favorable market momentum for the CLO asset class, which present, in the senior part of the capital structure, a return profile that is much more than remunerative compared to the modest risk of the instruments, in the belief to be able to generate significant alpha for our investors, amplified by the leverage effect. It’s a simple idea, but for effective implementation it requires agility and sophisticated technical skills, typical of a boutique like ours. It can be said that Zoo5 is representative of P&G Sgr’s stylistic code: the ability to generate solutions with a high technical rate capable of offering high returns, even in uncertain market contexts”, commented Fabiana Gambarotamanaging director di P&G Sgr.