Ninepoint gets BMO backing for credit fund growth

Bank to provide revolving credit facility

Ninepoint gets BMO backing for credit fund growth

Ninepoint Partners LP, a Canadian alternative investment management firm, has secured a $100 million revolving credit facility from BMO Bank of Montreal to support the growth and liquidity requirements of its Ninepoint-TEC Private Credit Fund II.

In a press release, it was reported that the credit line comprises $50 million in committed funds and an additional $50 million accordion.

BMO acted as the Sole Arranger, Sole Bookrunner, and Agent for the credit facility and conducted extensive due diligence on the Fund and its underlying loans, the Fund’s sub-advisor, Third Eye Capital Management Inc., and the Fund’s Manager, Ninepoint Partners.

According to John Wilson, Managing Partner and Co-CEO of Ninepoint, "Securing a credit facility for the Fund by a top-tier Canadian bank is a strong endorsement of both the prospects of private credit as an asset class and the value the Ninepoint-TEC strategy offers to investors."

Wilson added that the flexible credit facility would enable the firm to close new opportunities, manage cash flows in the Fund, and support the growth of the strategy.

Since its inception in 2010, the Ninepoint-TEC strategy has delivered consistent risk-adjusted average net annualized returns of 10.37%.

The Fund has achieved this by primarily structuring senior first-lien loans against valuable business assets with visible potential cash flows and/or liquidation or break-up values.

The Fund has consistently focused on lending to high-quality companies that are often overlooked or underappreciated by the general financial community due to perceived risk, complexity, or timing.

According to Ramesh Kashyap, Managing Director of Ninepoint’s Alternative Income Group, "Compared to the public markets, the uncorrelated nature of private credit continues to benefit retail and institutional investors in diversifying their portfolios."

Kashyap added that the unprecedented opportunity for private credit to deploy capital at very attractive risk-adjusted returns, given recent bank failures and general tightening of credit availability, makes the asset class appealing to investors.

Total assets under management in the global private credit asset class are expected to nearly double in size by 2027 to $2.25 trillion at a compound annual growth rate of 10.4%.

Read more: Credit: Potentially the Best Asset Class Available

Furthermore, retail investor demand is expected to play a significant part in the continued growth of the asset class as investors seek out opportunities for better portfolio diversification.

Currently, Ninepoint Partners LP oversees more than $8 billion in assets under management and institutional contracts. The company offers a diverse set of alternative strategies spanning Equities, Fixed Income, Alternative Income, Real Assets, F/X, and Digital Assets.

On the other hand, BMO Bank of Montreal, which has total assets of $1.14 trillion as of October 31, 2022, is a highly diversified financial services provider that offers personal and commercial banking, wealth management, and investment banking products and services to 12 million customers.