AlbaCore Capital Group Closes Dislocation Fund
European credit specialist AlbaCore Capital Group (“AlbaCore”) announces the final close of AlbaCore Investment Opportunities L.P. (“AIO”). AlbaCore secured over $1bn of commitments for the dislocation strategy, both in comingled and SMA format, which started investing at the depth of the crisis in mid-March. AlbaCore’s dislocation investing generated a 55% IRR1 since launch to the end of November 2020, whilst benchmark credit indices saw low single digits with year to date returns of 1.7%2 . AlbaCore has generated positive returns across all strategies to date in 2020.
AlbaCore launched the dislocation strategy to engage with the opportunity in what it viewed as a credit picker’s market. The team maintained their fundamental approach and were focused on companies that they have tracked for years. Many companies which have consistently been regarded as strong credits through the end of 2019, had yet to present a double digit total return opportunity. During the 2020 dislocation, these credits came into AlbaCore’s relevant price target range, whilst maintaining their strong fundamentals. With the deep knowledge and credit underwrite in place, the team was poised to capture the opportunity.
Bill Ammons, Founding Partner and Portfolio Manager Officer at AlbaCore Capital Group, commented:
“We were in a unique position to move quickly and yet maintain AlbaCore’s disciplined process and depth of credit analysis. The team’s persistent fundamental credit research combined with our 2019 CLO warehouse launch generated an extensive watch-list that covered a significant portion of the European universe. When the price was right, we were ready.”
The launch of a dedicated dislocation strategy can be seen to consolidate AlbaCore’s position as one of the leading European specialist credit managers. AlbaCore is proud to have extended its global investor relationships, despite the challenges of a global pandemic, and extends thanks also to existing investors who continue to be valued partners.
David Allen, Founder and Chief Investment Officer at AlbaCore Capital Group, commented:
“This year has required an agile approach to investing and a razor sharp focus on risk and relative value. At AlbaCore, we have navigated the 2020 market by activating our dislocation strategy, maintaining hands-on management of our AlbaCore Partners flagship funds and significantly increasing our investments in senior secured opportunities across our strategies. We are delighted to continue to expand our product offering for our partners in a thoughtful and opportunistic way. We look forward to continuing to deliver for our investors across the credit spectrum.”
AlbaCore’s Product Strategies:
AlbaCore Partners: Both of the flagship Partners funds, which have a hybrid strategy investing in private and public credit, actively drew capital to 85% in March 2020. The funds have invested $10.4bn3 and achieved 11%4 returns since inception with significant alpha capture of +700bps when compared to relative benchmarks5 .
Private Credit Investing: Whilst liquid market opportunities are in focus this year, AlbaCore has continued to structure a number of large, off-market, bespoke private transactions, committing $2.4bn6 of capital alongside co-investors. With this year’s activity, AlbaCore has now offered over $3.5bn7 in co-investments since inception - a core part of the AlbaCore offering.
Liquid Credit Investing: The AlbaCore team has invested over €8.7bn8 in liquid investments across strategies since inception, delivering a 10.9%9 IRR. To capitalize on this year’s market volatility and the team’s expertise, AlbaCore saw significant activity in liquid markets across the platform. This part of the AlbaCore strategy provides greater flexibility for investors and can be maneuvered to focus on specific areas of the seniority spectrum.
CLO strategy: AlbaCore priced its maiden Collateralized Loan Obligation (“CLO”) in June 2020, achieving the tightest AAA spread for a European CLO following the pandemic at time of launch10 . AlbaCore combined a negative ESG screening criteria and risk focused ESG investment considerations with its agile fundamental research approach. This outcome as a first-time issuer is a testament to the broader markets’ understanding of the quality of the team and investment process at AlbaCore.
About AlbaCore Capital Group
AlbaCore is one of the leading European credit specialist focused on public and private corporate credit markets. The senior investment team have been investing with this hybrid strategy for over a decade11 . Founded in 2016, AlbaCore has invested $14.7bn12 across 275 companies for global pension funds, sovereign wealth funds, consultants, insurance companies, family offices and endowments.
AlbaCore is focused on consistently outperforming the market in the long term while protecting investor capital. The credit selection process is based on fundamental research with a focus on capital preservation, ESG factors and risk-adjusted returns.
Headquartered in London and with an office in Dublin, AlbaCore has a partnership approach with values at the center of the AlbaCore community.
1 As of 30 November 2020. Gross Internal Rate of Return (“IRR”) is calculated using fully equalized cash flows between the fund and an investor as if all current investors had been committed to the fund from inception. Rate of return calculated does not include management or performance fees, which would be reflected in a net IRR (that would be lower) actually received by investors.
2 As of 30 November 2020. 50:50 blended return of S&P Leveraged Loan Index and Barclays High Yield Index.
3 Invested capital is the sum of all 'buy' trades for the referenced AlbaCore mandates during the year of 2020 through to 30 November, and includes recycled capital.
4 Gross Internal Rate of Return (“IRR”) is calculated using fully equalized cash flows between the fund and an investor as if all current investors had been committed to the fund from inception. Rate of return calculated does not include management or performance fees, which would be reflected in a net IRR (that would be lower) actually received by investors.
5 We have used BAML Euro High Yield index, S&P Euro Lev Loans Index as benchmarks for the performance of European & relevant markets for the purpose of this analysis only. Market performance figures are sourced from Bloomberg AlbaCore does not manage its portfolio on the basis of the constituents of each of benchmarks, and therefore the analysis and comparisons made here may change materially over time.
6 Invested capital is the sum of all 'buy' trades for the referenced AlbaCore mandates, for private side investing only, during the year of 2020 through to 30 November, and includes recycled capital.
7 The co-investment opportunities represent the USD equivalent aggregate amount of investment opportunities we have offered to co-investors through AlbaCore managed vehicles or by a direct investments by the co-investor. This also reflects any potential co-investment opportunities offered, but not executed.
8 Invested capital is the sum of all 'buy' trades for AlbaCore mandates (including the AlbaCore Partners Funds, co-invest sidecar to these Funds, AIO, AlbaCore’s CLO and client SMAs), and includes recycled capital.
9 As of 30 November 2020. Gross Internal Rate of Return (“IRR”) is calculated using fully equalized cash flows between the fund and an investor as if all current investors had been committed to the fund from inception. Rate of return calculated does not include management or performance fees, which would be reflected in a net IRR (that would be lower) actually received by investors.
10 Source: Bloomberg as at 07 December 2020.
11 Including period prior to AlbaCore at the Canada Pension Plan Investment Board (“CPPIB”).
12 Invested capital is the sum of all 'buy' trades for all AlbaCore mandates since inception to 30 November 2020, and includes recycled capital and co-investment.
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