Fund Management

JP Morgan Launches Guernsey-Based Loan Fund

Sandra Kilhof, Reporter, London, 20 November 2013


JP Morgan Asset Management, has launched its Senior Secured Loan Fund, domiciled in Guernsey.

JP Morgan Asset Management, has launched its Senior Secured
Loan Fund. The placing and offer for subscription will close on 2 December 2013
and is expected to begin trading on 9 December 2013.

The launch will be the second new UK closed-ended fund managed by JP
Morgan Asset Management this year, building on its IPO, the JPMorgan Global
Convertibles Income Fund. The new fund is targeting assets of at least £100 million ($161 million)
at launch, as well as targeting wealth managers, funds of funds and
institutional investors.

The Guernsey-domiciled closed-ended investment product will
give investors access to a broadly diversified portfolio of floating-rate debt
instruments, at least 80 per cent of which will be senior secured loans,
targeting an initial dividend of 5p in respect of the company's first financial
period, with some secondary potential for long-term capital growth. The majority
of assets, minimum 80 per cent, will be in US or Canadian investments, and the
portfolio will be hedged back to sterling.

The fund will be managed by Jim Shanahan and Bill Morgan
from JP Morgan Asset Management’s high yield team, based in Cincinnati, Ohio.
The team currently manages assets of approximately $38 billion, of which more
than $6 billion is in senior secured loans.

“The loans market today is giving us good credit quality and
reasonable yield. We do not think that in the current policy environment we
need to go very defensive. At present we are focused on mid-range credits rated
B, where yields are in the 4-7 per cent range,” said senior portfolio manager
Jim Shanahan.

Dividends will be paid half-yearly in the first year, with
the intention of moving to quarterly dividend payments thereafter. The fund will
pay a management fee of 0.75 per cent per annum on the lower of its net asset
value, and the issue price per share will be 100p, with an expected opening net
asset value per share of 98.25p. The offer has a minimum investment of £1,000,
with no maximum investment limit, while shares are eligible to be held in an individual
savings account.

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