New feeder fund to meet institutional and high-net-worth demand for stable-return exposure to special situations strategy
Third Eye Asset Management (TEAM), an affiliate of Toronto-based Third Eye Capital (TEC), has announced the initial closing of TEC Credit Income Fund.
The fund has approximately $201 million of subscriptions of preferred units. TEC and its employees have invested $29 million, including $23 million in common shares, thus providing first loss protection for investors and the pre-funding of an income reserve.
An Ontario limited partnership, the income fund is to be operated as a “feeder fund” that will invest substantially all its assets in TEC Credit Income Master Fund, which is a Cayman Islands limited liability company.
The income fund, the master fund, and other entities that invest in the master fund are all managed by TEAM. They’re open to accredited investors, and have also been structured to attract capital from investors around the world.
The TEC Credit Income Fund was established to transition the Third Eye Capital Alternative Credit Trust (ACT Fund), also managed by TEAM. That was done in response to institutional and high-net-worth investors’ demand for a more predictable, stable-return exposure to TEC’s special situations credit strategy, as well as provide a longer fixed-term investment vehicle that’s better aligned with the underlying investments’ liquidity profile.
“We are grateful for the confidence shown by existing ACT Fund investors and new clients in backing our mission to help unloved and overlooked Canadian companies that are undergoing change or complex situations access strategic capital to grow,” said Arif N. Bhalwani, CEO of TEC. “The Income Fund allows investors to generate attractive fixed returns and the option for equity upside without the volatility and fee drag normally associated with private debt funds.”
The TEC Credit Income Fund offers several significant benefits including:
- An investment structure to provide investors with consistent returns and first-loss protection on credit losses;
- The option to participate in gains from equity kickers and other participation interests in portfolio companies;
- Lower costs than act fund with no management or performance fees;
- And true alignment between the interests of team with investors through its first-loss protection and ongoing maintenance of cash reserves.