BMS Specialist Debt Fund
In BMS Specialist Debt Fund, For InvestorsThe BMS Specialist Debt Fund
The BMS Specialist Debt Fund (the “Fund”) is designed to generate attractive double digit annual returns with low volatility and no correlation to equity and bond market indices. The Fund concentrates its activities in two distinct areas – Private Finance and Film Finance.
Private Finance is also known as Asset Based Lending (“ABL”) and provides companies with additional working capital to underpin growth. The underlying investments are typically debt structures, such as term loans, leases, bridge financing highly collateralised with both tangible corporate assets and future cashflows in a senior position.
Film Finance comprises the provision of debt finance to film production companies specifically set up for the funding of a feature film. This finance takes the form of discounting film tax credits, pre-sales contracts and senior position gap financing.
Investment Strategy
Investment decisions are made with an overriding focus on diversification, consistent returns and capital security.
Proprietary deal flow overlooked by traditional lenders especially in the current liquidity crunch, our credit assessment capability and highly robust risk monitoring enables the Fund to generate attractive returns in tandem with constant focus on principal protection.
Debt structures are generally coupled with upside potential in the form of warrants or profit participations.
What is Private Finance?
Most investors are familiar with ‘public finance’ securities such as bonds. Private financing typically occurs when a company needs to borrow but is either unable or unwilling to source financing from a bank and does not have the infrastructure, the credit rating or the inclination to approach the public market. The borrower may need funds to finance its business inventory, or may have a temporary or seasonal need for cash while awaiting payment for goods/services already delivered. Nimble lenders in the private finance arena, who understand the prevailing business and legal environment, can advantageously offer funds to a borrower with strong collateral or asset-backing. Typical collateral includes inventory (e.g. stock, equipment), real estate, accounts receivable, contract receivables and the intrinsic value of the company.
Approach
The Fund engages in providing finance via loans, factoring, discounted securities and leasing through a wholly owned-UK subsidiary. Fixed versus floating interest rate swaps and other hedging instruments may also be used. Returns are created through loan interest and performance-linked returns from equity warrants.
Sources of funds
BMS Finance acts as an advisor to the BMS Specialist Debt Fund.