Documents

BCI Credit Opportunities Fund

 

 

Key Information Document

 

Purpose

This document provides you with key information about this investment product. It is not marketing material. The information is required by law to help you understand the nature, risks, costs, potential gains and losses of this product and to help you compare it with other products.

 

Product

The BCI Credit Opportunities Fund (‘COF’ or ‘The Fund’) is a Cayman Island-domiciled fund offering non-voting, redeemable participating shares in various classes for subscription under the terms of the Offering Memorandum.

The Investment Manager is BCI International Ltd, a Jersey (Channel Islands) domiciled entity, authorised and regulated by the Jersey Financial Services Commission.

The Investment Advisor is BCI Finance Ltd, a UK Company, authorised and regulated by the UK Financial Conduct Authority.


You are about to purchase a product that is not simple and may be difficult to understand. This product is only intended for professional investors.

 

Type: Investment Fund investing into credit opportunities, specifically performing and non-performing loans. These loans are made via SPVs domiciled in Luxembourg and the Cayman Islands.

Objectives: To achieve a return on investment satisfactory to investors through the acquisition and subsequent management and disposal of portfolios of receivables.

 

Intended for retail investors?

No. Sophisticated, professional investors only.

 

What are the risks and what could I get in return?

Risk Indicator: The Fund invests in illiquid performing and non-performing loans. The IRRs for these loans are commonly mid-teens, which gives the Fund access to high rates of return, evidenced by its historic return profile. The illiquid nature of these loans means that a secondary market often does not exist and as such, the Fund and by extension, investor capital, would be exposed to heavy losses should the underlying debtors default. We have given the Fund a risk rating of 7.

 

Performance Scenarios: The Fund targets an annual return of >12% net of fees. There are no guarantees of achieving this target. This target is based on a) the rates of interest charged on underlying loans and b) the future recovery curves of the non-performing loans. These curves are reforecast quarterly.

The below table outlines the potential return over the next 5 years assuming different scenarios on the bases that you invest £100,000. The scenarios suggest how your investment could perform to allow you to compare with other products. These returns are estimates based on prior performance and are not exact indicators.

 

The figures should include costs of the Fund itself only and not those required for any advisors or service providers that you engage. They do not take into account your personal tax situation, which may affect how much you get back.

 

Performance scenario

1 year

3 years

5 years

Stress

scenario

What you might get back after costs

91,174.69

78,084.24

66,459.83

Average return each year

-8.83%

-7.92%

-7.85%

Unfavourable scenario

What you might get back after costs

101,907.25

107,773.55

113,986.01

Average return each year

1.91%

2.53%

2.65%

Moderate

scenario

What you might get back after costs

112,052.82

141,338.79

180,232.22

Average return each year

12.05%

12.22%

12.50%

Favourable

scenario

What you might get back after costs

113,615.57

147,322.13

193,085.22

Average return each year

13.62%

13.79%

14.06%

 

There are no performance caps. Relevant tax information regarding the country of domiciliation of the Fund, the UK and FATCA is contained with Offering Memorandum of the Fund.

 

What happens if BCI Credit Opportunities Fund is unable to pay out?

Any investment made into the Fund should be considered as high risk. The Fund does not guarantee any form of return. An investor should not make an investment in the Fund unless they are prepared to lose all or a substantial amount of their investment.

 

What are the costs?

Costs over time: The consolidated annual operating costs of the Fund, consisting of recurring costs, are expected to be in the region of £350,000.

Composition of costs: These types of costs in the Credit Opportunities Fund are consistent with a vehicle of this nature and consist primarily of administrative, accounting, audit and legal costs. There are also investment management fees (performance fees are subject to a hurdle of 8%) payable from the Fund to the Investment Manager.

 

How long should I hold it and can I take money out early?

Investors are able to hold their position for as long as they feel appropriate. Any redemption request for value equal to or less than the greater of (i) £100,000, and (ii) 15% of the aggregate Net Asset Value of the redeeming Shareholder’s shares will not be subject to redemption fees. Any redemptions that do not meet these criteria that are made within the first 12 months of investment are subject to an early redemption penalty of 10% of redeemed amount. Redemptions made in the second 12 months of investment are subject to an early redemption penalty of 5% of redeemed amount.

The Fund has a minimum investment level of $100,000; if an investor’s aggregate position in the fund for any reason falls below this, then the Fund Directors reserve the right to redeem the remainder of an investor’s position.

 

Recommended holding period:Investors should planto hold their investment for a longer-term horizon and the recommended holding period is 5 years. In line with the Fund’s liquidity profile, investors may redeem their shareholdings at any time (subject to fees noted above as relevant).

 

How can I complain?

Any complaints should be made in the first instance to the Investment Advisor, BCI Finance Limited. Please write to the following: The Compliance Officer, BCI Finance Ltd, 1 Hammersmith Broadway, W6 9DL.

If you feel that your complaint has not been dealt with appropriately, all investors reserve the right to forward their complaint to the Investment Manager at the following address: No 2 The Forum, Grenville Street, St Helier, Jersey, JE1 4HH and ultimately the respective regulator (Financial Conduct Authority and the Jersey Financial Services Commission).