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Beating the banks off the beaten path

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Formed in February 2016, Bedford Row Capital Advisers, one of the leading non-bank arrangers of listed debt securities, started out with modest aims of achieving two or three listings in its first year, but ended up doing 11 and issuing GBP440 million in senior secured, asset backed bonds with yields of between 5 and 8.5 per cent.

Alistair Evans (pictured), director, says: “Our raison d’etre is to fill the gaps that the banks used to occupy,” citing both a requirement for debt funding and an unwillingness to lend in the aftermath of the global financial crisis due to bank de-leveraging and increased regulatory pressures. 

“Given that nearly USD14 trillion in negative-yielding debt is currently in circulation and there are many under-funded pensions out there, we also believe investors are desperately searching for yield.

“Banks aren’t lending and yet there are lots of good businesses with good assets and strong cash flow who can’t get access to debt funding,” Evans says.

While the usual route to creating a bond might involve a trip to the lawyers, Bedford Row Capital Advisers takes on the whole process, listing bonds on HMRC recognised exchanges such as Dublin, Channel Islands or Frankfurt, and then supporting them by running the listed structure. 

For investors who are suffering from what Evans calls the ‘return-free risk’ of investing in Treasuries, the resulting high yield asset backed and transferable securities they produce offer a good alternative portfolio solution.

“Our niche is that we see investment banks are mainly just involved in the larger deals of around USD300-500 million, as they have many mouths to feed and predominantly deal with other large institutions, whereas as a boutique, we believe that a lot of the best yields and assets are available between GBP20 million and GBP150 million,” Evans says.

Bedford Row Capital Advisers sees a wide spread of deals with two to five potential new deals coming to them every week, which they then assess to determine the most interesting in terms of yield and investor security.

“Real estate is probably the most logical and well suited asset class for this type of structure,” Evans says. However, they have a diversified book. The firm did two renewable energy listings in the biomass sector last year and is soon to be listing a mining deal as well as considering two deals in the aviation and the shipping sectors. 

“Banks aren’t interested in anything slightly off the beaten path at the moment and investors are increasingly hungry for yield therefore it made perfect sense for us to fill this gap,” Evans says. 

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