January 10, 2024
Additional investment opportunities are opening up for investors – a new investment fund, ‘Capitalica Debt Fund,’ has been launched by SBA Group’s investment management company, ‘Capitalica Asset Management.’ This marks the fifth fund managed by ‘Capitalica Asset Management,’ which will be focusing on investing in high-yield bonds of companies in the Baltic region and other European countries. The authorization to establish ‘Capitalica Debt Fund’ was granted by the Bank of Lithuania on January 9, 2024.
The new limited-term (5+2 years) fund will invest in corporate debt securities (bonds). Priority will be given to small and medium-sized enterprises with limited access to conventional bank financing. The fund aims for a 10 percent average annual return and plans to distribute periodic returns of up to 5 percent to investors.
“The creation of the debt fund is a logical continuation of ‘Capitalica Asset Management’s’ long-standing operations. ‘Capitalica Debt Fund’ becomes our fifth investment fund, allowing us to expand into new sectors and offer additional capital deployment opportunities to our investors while diversifying operational risks. We will be a gateway to access a diversified bond market, providing investors with the opportunity to access selectively curated bond issuances,” says Mindaugas Liaudanskas, CEO of ‘Capitalica Asset Management’.
Expert management of the fund
Experienced debt capital markets and corporate financing professional Ignas Šablevičius has been appointed as the new manager of ‘Capitalica Debt Fund’. He joined the ‘Capitalica Asset Management’ team last November. With nearly 20 years of experience in the banking sector, the current manager of ‘Capitalica Debt Fund’ previously held the position of Head of Debt Capital Markets at ‘Luminor’ Bank.
According to I. Šablevičius, investing in bonds is particularly attractive to investors who, like ‘Capitalica’, seek stable investment returns and minimal risk of portfolio value decrease: “A bond portfolio allows forecasting investment profitability, receiving periodic income, and the issuer’s commitment to redeem bonds at nominal value upon maturity limits the risk of value depreciation.”
“The current high-interest-rate environment leads to attractive bond returns, hence an increasing interest from investors in this asset class. Nevertheless, it’s crucial to effectively manage credit risk – the ever-present possibility that an issuer might not redeem the issued bonds upon maturity. Experts comprising the ‘Capitalica Debt Fund’ team can assist investors in this aspect,” adds I. Šablevičius.
Advantages of the fund
According to I. Šablevičius, the main advantages of the new fund for investors include periodic distribution of fund assets, professional investment selection and risk management, as well as portfolio diversification.
“To ensure maximum diversification, the investment portfolio will be split geographically and across various sectors. We plan to allocate a significant portion of the fund’s assets to Baltic companies and limit investments in one or several companies or sectors. The typical investment size should range from 1 to 5 million euros,” states I. Šablevičius.
Speaking of potential risks, the manager of ‘Capitalica Debt Fund’ emphasizes, “It’s impossible to foresee absolutely all risk factors and future circumstances. Therefore, comprehensive analysis alone is insufficient. It’s particularly crucial to structure the investment portfolio with a sufficient number of different investments so that one potential failure does not significantly impact the overall investment value.”
The target size of the fund during its operational period is up to 100 million euros. This capital will be raised by attracting funds from private and institutional investors and investing them in target companies. According to I. Šablevičius, the decision to focus on Baltic region companies was driven by ‘Capitalica Asset Management’s’ interests in contributing to the development of this region. The new fund will also aim for environmental and social impact: “We are concerned about the environment in which we operate, hence our goal is for a significant portion of the fund’s portfolio to consist of bonds issued by companies contributing to solving current pressing environmental and social issues.”
