By Daniel Lanyon on Monday 29 June 2020
The asset manager will be investing in loans originated by fintech lenders including Lending Club and Prosper.
Dynamic Credit has launched a new lending fund to invest in loans originated by fintech lending platforms and other non-bank lenders.
The Dynamic Credit Diversified Loan Fund has seed investments from Dutch and German institutional investors and has already deployed money to buy US consumer loans from Lending Club and Prosper.
The strategy targets loans from borrowers it sees as most likely to remain employed during COVID-19 uncertainty and are least likely to default, building a portfolio of short duration, small ticket loans.
The strategy will allow the fund to invest in ‘forward flow’, meaning going to an originator, and then picking out from that originator what subset of specific loans to fund as well as buying portfolios of loans already originated.
Matt Kus, Director, Business Development at Dynamic Credit says the firm will be pursuing the latter “quite aggressively” at present and can run the fund’s strategy at scale - more than €1bn.
“In the last two months, we've actually had a number of parties approaching us where they needed to sell out their exposure, specifically in early March, owing to the major volatility. I think in the coming months, we're going to see a lot more of these opportunities to buy portfolios of performing loans from distressed sellers.”
It's not really a COVID fund though, he says, but a fund where the strategy is focused on active selection and seizing these opportunities as they come up.
"It has actually worked out very well for us in terms of timing," he added.
While the fund’s assets are at present in consumer US loans only, he says the investment team will be looking across SME and property also.
Offered in both USD and EUR denominated share classes to Professional Investors only, the fund seeks to deliver net returns of 5-7 per cent.
"We are very confident that this strategy, as we've developed it, is going to allow us to deliver stable returns through this turmoil because of that intense quantitative, focused on active selection," Kus said.
Founded in 2003, Dynamic Credit has originated over € 10.5bn in Dutch mortgages, manages more than € 8.2bn, and has offices in Amsterdam, New York and Jakarta. Dynamic Credit started in New York as a fixed-income asset management firm, extending their services with an advisory practice in the following years.
In August 2017, Dynamic Credit launched the Dynamic Credit Funds ICAV, an Irish AIFM regulated fund umbrella.
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