Charismatic Capital debuts a new private debt fund for wealthy Asians, according to founder and chief investment officer Lam Ching Ching.
The new fund – Charismatic debt equity fund – is an alternative asset class in direct lending.
The fund allows investors to invest in secured asset-backed lending to shareholders of listed companies against their listed share.
Targeting family offices, high net worth individuals (HNWIs), and some boutique institutions, the fund focuses on listed equities with good liquidity in Hong Kong, Singapore, Indonesia and Thailand, as well as Europe, Citywire has learned.
These are the more developed markets with enough debt and companies that have certain capitalisation and liquidity, and no capital controls, Lam said.
Among the targeted markets, Indonesia is second to Hong Kong in terms of demand for these types of direct lending, she added.
The fund will only do stock financing for listed companies with market capitalisation between $100 million to $500 million, Lam said.
Due to Basel III and other regulations, banks and securities houses no longer offer single stock financing against listed companies with market capitalisation below $500 million, and this creates a niche in the private lending space.
Lam said the concept of private debt fund has been very popular in the US the last decade and is slowly picking up in Europe in the past five years. However, the availability of private debt funds is lacking in Asia.
Most of the existing private debt funds in the market, particularly in the Europe, are focused on SMEs lending, trade finance, mezzanine, or real estate, but not in margin loans and stock financing like Charismatic debt equity fund.
In terms of risk management, Lam said exposure to each listed company caps at 5% of their market capitalisation. In addition, there will be a personal guarantee of beneficial owner of corporate borrower.
Charismatic Capital aims to raise $250 million for the Charismatic debt equity fund in a few tranches, Lam said, adding that the fund is opened for subscription and Charismatic Capital targets to raise $50 million for its first close in June.
Quayside Fund Management is the fund manager for the Charismatic debt equity fund, while Mitsubishi UFJ Financial Group is the fund’s depositary and administrator.