Legal & General Investment Management (LGIM) on Wednesday has announced that it has launched its Short-Term Alternative Finance Fund under its newly created umbrella fund platform leveraging the Luxembourg regime for Reserved Alternative Investment Funds, or Raifs. The move comes in response to growing investor demand for such credit strategies, the firm said.
Registered in Luxembourg, the fund will invest in a portfolio of unlisted debt securities with maturities of less than one year, offering investors a strategic alternative to cash investments and other short-term credit options. The fund’s strategy aims to achieve attractive returns with low volatility and an average investment-grade rating.
LGIM created the umbrella vehicle, known as Legal & General SCA Sicav-Raif, in January, according to a filing to the Luxembourg Business Register. Carne Global was appointed as the fund’s Alternative Investment Fund Manager (AIFM). Under the Luxembourg Raif regime, it is the not the fund itself but the AIFM that bears legal responsibility towards the supervisory authority, the CSSF.
Luxembourg umbrella
LGIM said it intends to launch additional funds under this Raif umbrella. “The recently launched and Luxembourg-registered Raif platform represents an important step in LGIM’s European and global growth ambitions; offering international investors access to LGIM’s expertise in unlisted debt securities,” the company said. “This provides a good basis for other funds with an international focus, which LGIM plans to launch on the platform in the course of this year. ”
Under the Luxembourg fund umbrella, the Short-Term Alternative Finance Fund fund will diversify investments across various short-term alternative financing types, including capital call facilities, supply chain financing, trade receivables, and asset-backed financing. It targets a broad range of institutional investors, notably insurance companies, pension funds, and family offices.
Growing demand for credit
LGIM’s first Short-Term Alternative Finance strategy, launched in 2021, now manages over 1 billion pounds in short-term strategies for a range of clients, allowing external investors to invest alongside the Legal & General Group. The firm said that the growing demand for credit facilities from alternative investment funds and large corporations, coupled with banks’ inability to serve these entities alone, has led LGIM to establish relationships with global banks and other financial intermediaries to identify opportunities.
LGIM manages over 18 billion pounds (21 billion euro) in investments in unlisted debt securities on behalf of institutional clients worldwide, spanning real estate, infrastructure, corporate debt, and alternative debt securities.
In Luxembourg, Legal & General has been active since 2013 through its Sicav vehicle, through which it offers close to 20 investment funds that collectively held some 7.5 billion euro in assets at the end of 2022, according to its Luxembourg annual report.