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Brookfield-Backed LCM Seeks €6 Billion for Private Debt Fund

Benjamin Klein, senior portfolio manager at Baskin Wealth Management, joins BNN Bloomberg to discuss his top stocks this Canadian earnings season.

(Bloomberg) -- LCM Partners Ltd., an alternative asset manager partly owned by Brookfield Asset Management, is raising €6 billion ($6.5 billion) for a new fund that will partly invest in non-performing loans.

London-based LCM has received €3.3 billion of indicative interest from investors for its Credit Opportunities 5 fund since marketing efforts began in June, according to Chief Executive Officer Paul Burdell. The firm targets an annual internal rate of return of 15% for the fund, which will also invest in performing and rescheduled loans to individuals and small- and mid-size companies.

The fund aims to scoop up loans that banks need to shift off their books as new Basel III rules tighten capital requirements. At the same time, many rivals to LCM are being forced to slow down, and in some cases restructure, after they took on too much debt to fund previous loan purchases.

“It can sometimes feel like we are a garbage people for the banks because we buy assets and structures they either don’t want or don’t need any more,” Burdell said in an emailed reply to questions.

The new fund won’t use leverage when acquiring non-performing loan portfolios, but will use it selectively for performing and rescheduling loans, Burdell said. He added that LCM is able to compete because its proprietary technology and in-house servicer make it more efficient than rivals. 

The fund will partly invest in loans via forward-flow agreements, which allow investors to buy assets on a recurring basis over a set period. LCM has 27 such contracts with European financial institutions. LCM expects to hold a first close on the fund in March.

LCM Partners is controlled by founders and managers including Burdell, while Brookfield has the remaining 49.9%. 

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