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At-a-glance
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Overview
European Capital Solutions strategy aims to capitalize on the current attractive investment environment by providing flexible financing solutions. The approach focuses on bespoke financing with higher return potential to account for market dislocations and more complex credits, while retaining downside management.
Investment Approach and market opportunity
Capital Solutions is a versatile special situations strategy, designed to deliver customized financing solutions to mid-sized European companies in all economic environments. We leverage strong deal flow and market dislocations to create attractive investment opportunities.
Key investment areas
- Discounted debt & hung deals
- Debt available at higher yields due to market dislocation.
- Market dislocation driving forced selling.
- Arcmont typically serves as a whitelist buyer for choice purchases.
- Specialist lending
- Premium lending in healthy but complex situations.
- Focus on investment opportunities involving higher complexity.
- Emphasis on credit or market dislocations.
- Capital solutions
- Sponsor-friendly refinancing and liquidity solutions.
- Constrained financing options where sponsors value certainty of execution.
- Addressing macro challenges including inflation and rising base rates creating earnings and cashflow pressure.
- Market drivers
We believe the current environment presents compelling tailwinds including:- Strong Deal Flow from market participants seeking flexible capital solutions.
- Market Dislocation creating opportunities for both primary and secondary debt purchases.
- Macro Challenges including inflation pressures and approaching loan maturities.
- Direct Lending Advantage allowing replacement of traditional capital sources and trading of discounted debt.
Attractive Market Opportunity
Capital Solutions business is a versatile special situations strategy, designed to deliver customised financing solutions to mid-sized European companies in all economic environments .
MACRO CHALLENGES
Can create demand for flexible capital potentially
offering higher returns.
MARKET DISLOCATION
Direct lenders able to replace
traditional sources of capital and
trade discounted debt.
STRONG DEAL FLOW
Tailwinds for both primary and
secondary debt purchases.
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Important information on risk
Past performance is no guarantee of future results. All investments carry a certain degree of risk, including the possible loss of principal, and there is no assurance that an investment will provide positive performance over any period of time. Certain products and services may not be available to all entities or persons. There is no guarantee that investment objectives will be achieved.
Investors should be aware that alternative investments are speculative, subject to substantial risks including the risks associated with limited liquidity, the potential use of leverage, potential short sales, currency exchange rates, and concentrated investments and may involve complex tax structures and investment strategies. Alternative investments may be illiquid, there may be no liquid secondary market or ready purchasers for such securities, they may not be required to provide periodic pricing or valuation information to investors, there may be delays in distributing tax information to investors, they are not subject to the same regulatory requirements as other types of pooled investment vehicles, and they may be subject to high fees and expenses, which will reduce profits.
Investing in debt securities involves risks such as market risk, credit risk, interest rate/duration risk, call risk, tax risk, political risk, economic risk, and income risk. Income is only one component of performance and investors should consider all of the risk factors for an asset class before investing. Credit risk refers to an issuers ability to make interest and principal payments when due.
Senior Loans may not be fully secured by collateral, generally do not trade on exchanges, and are typically issued by unrated or below-investment grade companies and therefore are subject to greater liquidity and credit risk. Lower credit debt securities may be more likely to fail to make timely interest or principal payments. Rates on senior loans typically adjust with changes in prevailing short-term interest rates; therefore, when short-term rates rise, senior loan rates will rise and when short-term rates decline, senior loan rates will decline.
