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€1.5bn Capital Bay fund responds to fall in bank lending

Rolf Engel.

Asset manager and property developer Capital Bay Group has launched a new open-ended credit fund with a target volume of €1.5 billion.

The Capital Bay Europe Secured Whole Loan Fund is being established under Luxembourg law and will provide financing for real estate developments and investments in Europe.

The fund has been seeded with a portfolio of loans in London and major UK cities originated by London-based specialist lender EVH Finance, the fund’s nominated advisor.

There is a pipeline of projects and acquisitions in France, Germany, and Italy which will be added to the portfolio.

A 6-8% internal rate of return (IRR) is expected and institutional investors can participate in the fund with a minimum of €10 million .

“We have seen during the corona pandemic that traditional bank financing has declined, especially for project developments, due to the uncertainties in the market and regulations such as Basel III,” Capital Bay CFO Rolf Engel said. “Project developers are increasingly turning to whole loans from alternative lenders to finance their projects.”

He said that the CBES Whole Loan Fund is a response to this demand.