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2018 was in many ways a record year for Kreditfonden. The company behind Scandinavian Credit Fund 1, a fund that, via direct loans to small and medium-sized companies, seeks stable returns at low market risk and low covariation with the stock market, saw its managed capital increase by over 130 percent to SEK 2.8 billion. At the same time, the number of shareholders rose to over 4,600. However, the company is not resting on its laurels for 2019, with the support of new recruitments, a clearer organization and new funds in the offing, Kreditfonden will continue to build on its recipe for success.
"We continue to see a great deal of interest in our management, both from private individuals and from institutional investors. The fund has delivered on its return target of 6-8 percent annual return at a very low market risk. It attracts attention, especially when the stock market has been shaky and alternative asset classes such as hedge funds have not performed," says Fredrik Sjöstrand, who is responsible manager of the fund.
According to Sjöstrand, the ceiling for the fund's managed capital, which was previously set at SEK 3 billion, will be raised to SEK 5 billion. He thinks this is reasonable in line with the fund's expansion of its organization, while at the same time he sees no major limitation in terms of finding new loans that meet the quality requirements set by the fund.
"We will never waive the credit assessment. It is a central part of our philosophy and the explanation for why we have succeeded so well so far. There is still a large range of loans that meet our quality requirements and that offer good return opportunities. As our organization has grown and strengthened, we can more easily meet a larger management volume and take on a larger loan stock," he says.
Clearer structure guarantees growth
In 2018, Kreditfonden has refined the structure, which means that it has become its own AIF manager from previously operating under an umbrella organization. According to Sjöstrand, this means that they get greater degrees of freedom and can now tackle a Nordic expansion.
"Our intention is to expand the offer to Norway and Finland over the next year, which is in line with the ambition to become the leading player in direct lending to companies in Scandinavia and at the same time create unique investment products."
To support continued expansion, Kreditfonden has grown in terms of staff and has also moved to larger premises to meet a growing organisation.
Currently, the fund's team of loan evaluators, or what is known in the industry as Debt Capital Market (DCM) originators, consists of six people with a broad and diversified background and skill base. At the beginning of 2019, another senior employee will join the group.
"We have recruited Carl Levert, who was previously head of DCM at PWC Sweden and who has extensive experience in corporate finance and analysis. As we grow and in the future will offer more complex products aimed at institutions, it will be central for us to ensure the supply of competence in the company", says Sjöstrand.
New funds in the offing
During the next year, the credit fund will expand the product offering to include an institutional version of the fund, which now goes by the name Scandinavian Credit Fund 1 and which is primarily aimed at private investors.
"Towards the end of this year, we will apply to launch a second version of the fund which will target institutional investors. The fund will, if all goes according to plan, be launched in the first half of 2019 under the company's own AIF license. It will be offered with a lower management fee and have other liquidity requirements to ensure that we can take in larger deposits," says Sjöstrand.
In addition to this fund, they will also launch a fund focused on factoring.
"We are constantly looking at ways to develop our product offering and take advantage of the opportunities that exist in the business loan market. Factoring, like direct loans, is a way for us to create returns by acting as an attractive counterparty when small and medium-sized companies are looking for liquidity solutions," says Sjöstrand, who at this point does not want to reveal too much about the fund's design.
“This is the best we know”
Since Kreditfonden's inception, Fredrik Sjöstrand and the co-founder, also CEO, Peter Norman, have been central figures in the company's strong development. When asked if there is a risk that the founders will withdraw, Sjöstrand's answer is unequivocal - no.
“This is the best we know. When we started the fund almost three years ago, the ambition was to create the leading independent operator of direct loans to companies in Scandinavia. We have come a long way, but we see so many incredible opportunities ahead. Our ambition is to develop products that are top class in this segment and that can provide investors with a safe savings option in times when traditional asset classes are considered highly valued by many."