Fund Commentary – September
The Coral Cove Private Credit Fund (the “Fund”) returned 0.95% (Class I Units) in September. Annualized returns since inception (January 2021) are 9.89%.
Fund Insights
The Fund’s underlying portfolio (the “Portfolio”) has exposure to approximately 62 invoice factoring, ABL, equipment finance, real estate, lender finance, specialty finance or similar type loans. Presently, the geographic weighting of the portfolio is approximately 76% to the US and 24% to Canada. Of these positions, the largest portfolio weights are 50% to invoice factoring, 26% to commercial finance (which includes asset-based lending, real estate and equipment financing), and 18% to lender finance.
Notes from Underwriting
Closing new, quality clients can only be achieved with a robust and healthypipeline of opportunities. At any given time, over the past few months, we have maintained a pipeline of 100+ opportunities in various stages of review. This pipeline can include very slow-moving files, files under review, and files that are in full due diligence.
Every time a new opportunity arises, we quickly determine whether it will be a fit, asking ourselves: Is there enough collateral to support the loan? Is the collateral something we can get our arms around and value appropriately? Does the company exhibit viability and an ability to service the debt? These questions can disqualify opportunities at the outset or require further review. As they move through our pipeline, we continuously review and analyze the details,increasing our comfort level or uncovering issues that will lead us to decline.
Sometimes, the pipeline can feel like a revolving door, with prospects moving in or out, but ultimately, turning those 100 opportunities into 2 or 3 quality clients continues to be our goal.
Notes from Account Management
As a lending institution, we have the privilege of helping businesses grow and achieve their goals. And it’s not all about numbers and profits for us – there is an emotional aspect to our work that drives us to do better every day. It gives us a sense of satisfaction knowing that we are positively impacting the businesses we support.
Recently, we increased two existing equipment loans, one to a Texas-based equipment rental business and another to a West Virginia-based coal mine operator. We have been supporting these businesses for a few years now and we have witnessed firsthand how our financing has helped them grow over the years. That’s why we didn’t hesitate to support their growth plans when they approached us for additional funding.
The first loan to the Texas-based equipment rental business was increased by $3.5 Million, bringing it up to $10.9 Million in total funding. The proceeds from this loan were used to acquire additional equipment, enabling the business to expand its operations and serve more customers. We are proud to have played a part in their growth journey and look forward to seeing them reach new heights with our support.
The second loan, to the West Virginia-based coal mine operator, saw an initial funding of $2.5 Million, which was further increased by $1.4 Million for a total of $3.9 Million in funding. The additional funds were used to finance the purchase of earthmoving equipment, which will improve the efficiency and productivity of the business. Seeing our clients succeed and thrive drives us to do more and be better every day.
April Fund Commentary