Distribution Policy Change
23 April 2021
CVC Credit Partners European Opportunities Limited (the "Company")
(a closed-ended investment company incorporated in Jersey with registration number 112635)
Registered Office: IFC 1, The Esplanade, St Helier, Jersey, JE1 4BP
Distribution Policy and Investment Vehicle Management Fee
The information contained within this announcement constitutes inside information.
- Dividend increased to 5 pence per Sterling Share / 5 cents per Euro Share for the next 12 months. The revised policy reflects a yield of approximately 5% based on the current prices of both the Company's Sterling and Euro shares
- The management fee payable in respect of CVC European Credit Opportunities S.à r.l. (the "Investment Vehicle") (the "Investment Vehicle Management Fee") reduced to an annual rate of 0.9% of net asset value, with a tiered fee structure put in place to support future reductions based on growth in the Investment Vehicle's total aggregate AUM
- Updated distribution policy reflective of the Company's strong performance and growth opportunity present across European corporate credit
- Positions the Company strongly to capitalise on investor demand for income-generating, stable and decorrelated investments in a low-yield environment
During 2020, the Company made changes to its distribution policy to reflect the enhanced level of market risk evident during Q2/2020, and also to reflect improving conditions during the latter part of the year. These changes led to an increase in dividends (from 4 pence per Sterling Share / 4 cents per Euro Share to 4.5 pence per Sterling Share / 4.5 cents per Euro Share respectively) such that the current policy reflects a yield of approximately 4.5% based on the current prices of both the Company's Sterling and Euro Shares.
As noted in the Company's annual financial report for the year ended 31 December 2020, the board of directors of the Company (the "Board") has been in the process of conducting a review of the Company's dividend policy with the manager of the Investment Vehicle, CVC Credit Partners Investment Management Limited (the "Investment Vehicle Manager"), with a key focus being the determination of a stable level of dividends that, based on current market conditions and the expected cash yield, could reasonably be declared without recourse to capital for a forward looking period of 12 months.
Following completion of this review, the Board is pleased to announce that the Company will be increasing its annual dividend by 0.5 pence per Sterling Share / 0.5 cents per Euro Share to 5 pence per Sterling Share / 5 cents per Euro Share, with effect from the dividend payments for quarter ended 30 June 2021, to be paid in Q3 2021. The revised policy reflects a yield of approximately 5% based on the current prices of both, the Company's Sterling and Euro Shares.
Investment Vehicle Management Fee
The Board is also pleased to announce a reduction in the Investment Vehicle Management Fee, which will be reduced by 0.1% from 1% to 0.9% per annum of net asset value, effective 1 May 2021. The revised fee structure offers scope for further step-down reductions based on the Investment Vehicle's total aggregate AUM.
Ratchets resulting in further fee reductions are included if the Investment Vehicle's total aggregate AUM increases to €500 million, €750 million and €1 billion. As each of these thresholds is met, the Investment Vehicle Management Fee will be reduced by a further 5 basis points, capped at 0.75% per annum of net asset value if the Investment Vehicle's total aggregate AUM increases to €1 billion or more. The Investment Vehicle Management Fee is subject to future increases should one of the thresholds be met and subsequently the Investment Vehicle's total aggregate AUM decreases below the threshold (for example, due to investor redemptions).
The inclusion in the fee structure of mechanisms for further step-down reductions subject to the growth in the Investment Vehicle's total aggregate AUM, reflects the growth ambitions of the Board and Investment Vehicle Manager for the Investment Vehicle following conversations with prospective investors. As such, a more competitive fee structure has been implemented to capitalise on the Company's strong performance over multiple years and the continued opportunity present across European senior secured loans and other sub-investment grade corporate credit.
Richard Boléat, Chairman of CVC Credit Partners European Opportunities Limited, said: "We are pleased to announce these changes to the Company's distribution policy and management fees, which were taken after extensive consultation with the Investment Vehicle Manager. The dividend target has been placed at a level approaching that which prevailed before the onset of the Covid-19 pandemic, which caused significant volatility across European credit markets. Today's announcement demonstrates how strongly the Company has responded since Q2 2020 and is reflective of our positive outlook moving forward."
Pieter Staelens, Managing Director and Portfolio Manager at CVC Credit Partners Investment Management Limited, Investment Vehicle Manager, said: "We continue to see significant opportunity across the spectrum of European corporate credit and our flexible investment strategy allows us to rotate the portfolio to capture the most attractive risk-adjusted returns. During Q1, this has enabled us to deploy over €70m in opportunistic credit investments, which should continue to generate both income and capital upside in the near and medium term."
The person responsible for arranging for the release of this announcement on behalf of the Company is Melissa Le Cheminant of BNP Paribas Securities Services S.C.A., Jersey Branch, Company Secretary.
Past performance cannot be relied on as a guide to future performance.
CVC Credit Partners European Opportunities Limited:+44 (0)1534 625522
BNP Paribas Securities Services S.C.A., Jersey Branch+44 (0)1534 813873 / 709178
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