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Scandinavian Credit Fund I AB (publ) reports a NAV rate for June of 103.04. That's up 0.35 (0.3408%) – a slightly weaker month than expected.
Inflow for the month of June is about SEK 50 million, many thanks for that. New lending in June is approximately SEK 58 million.
We have had a review of the portfolio with our external auditor PWC and this has led to minor adjustments to the values of some holdings. This is the reason for a slightly lower NAV this month. We will have a new review of a larger holding in September/October. The development in the company has been very positive during the spring and summer. However, we want it confirmed through a closer dialogue in the autumn with the auditors before we change the valuation of the company.
We are still clocking plus 6 % in this messy world which is very good.
One of our portfolio companies, Vimab AB, has been acquired by Headsent AB, which is listed on First North. The deal will be finalized when it is approved by Headsent's shareholders at an extraordinary general meeting that will take place on July 22. We cannot take up any possible price gain until it is clear and the deal is completed. There is a press release from Headsent available in the market for those interested.
Our lending objects are still doing well given the information we currently have, we of course follow all companies as carefully as during covid. It's a new worldview and it's important to stay one step ahead if it's possible. Given the situation the market is in, "cash" will be harder to raise. We are now receiving inquiries from large, fine companies that would otherwise be able to raise capital on the bond market. It is therefore a seller's market for whoever has liquidity. It is possible to charge good fees for new lending now.
The market
I have edited part of Teknikföretagen's analysis of May's inflation figure. They describe well the effect that rising energy prices have on other parts of the economy. All sectors are affected more or less directly or indirectly. One conclusion we can draw is that: everyone affected by these cost increases will strive to compensate for this as long as it is profitable for them to do so. We need to see a calmer demand pressure in the economy which makes it not worthwhile to compensate for increased input prices. This is, among other things, what the central banks are trying to achieve through interest rate increases. Hope they succeed even though they woke up late.
(source: Teknikföretagen)
Below you can see SCF I and its return since inception compared to a long bond fund. You can sell a long bond fund on the day, but you hardly get an interesting return if you compare with SCF I since its inception. It looks good to be able to present a curve that has produced a steady and consistent return.
(source Bloomberg)
IFRS 9
IFRS 9 June (see table below)
LTV shows how large the exposure is in relation to the value of the collateral. That is, in category 2, the security value after adjustments is equal to the exposure the fund has to the borrowers. It is an effect of the security value of a holding being written down at the same time as the reserve was reduced. In category 3, there is no change compared to the previous month.
ESG
Finserve Nordic, which is the fund's AIF manager, has in 2020 joined the company to the PRI network, Principles for Responsible investment. The network is independent but supported by the UN and encourages investors to invest responsibly by following the principles developed by the network.
Finserve Nordic believes that the integration of sustainability risks is an important part of the funds' investment processes. Sustainability risks are defined as environmental, social or corporate governance-related circumstances that could have a significant negative impact on the value of investments.
Social aspects include e.g. human rights, labor rights and equal treatment. Environmental aspects are e.g. the companies' impact on the environment and climate. Corporate governance aspects are e.g. anti-corruption, shareholders' rights and business ethics
All funds under Finserve's management follow the responsible investment process formalized in Finserve's Sustainability Risk Integration Policy. The policy is available on the company's website https://finserve.se/viktig-information/. Each fund's sustainability policy is available on the funds' websites.
We can announce that based on today's sustainability requirements for funds, Scandinavian Credit Fund I is to be considered a "light green" fund, which is very good. In Sweden, about 30% of all funds have a rating corresponding to light green or better.
When you do your analysis of the fund, you should primarily look at the credit risk and the liquidity risk in the fund. Are you comfortable with the credit risk that the fund's holdings generate? Furthermore, the assets are illiquid and it can take some time to get your investment back if many people want to withdraw deposited funds at the same time. The fund has a low market risk and has a low correlation with other asset classes.
We emphasize that we are not stressed by non-loaned funds, but continue to work based on our models for credit assessment, all to ensure a good diversification of the portfolio in relation to the credit risk we take.
If you need to sell your holdings, do it in the primary market, where you will get the best price.
The official NAV rate is published on the first banking day of each month, what is shown during the month on NGM is not, I want to emphasize not always the official NAV rate, as fund units may have been traded in the secondary market at a different rate than the official NAV.