Ninepoint Partners LP will stop paying cash distributions on three private debt funds that collectively manage $2-billion in assets, and will also skip the current redemption window on its flagship private debt fund, preventing investors from cashing out in the second quarter.
In its memos to investment advisers, Ninepoint did not specify why it has halted cash distributions on the three funds. The asset manager wrote that it has been “reviewing various options with the aim of creating liquidity for the fund,” adding,"at this time, liquidity generated will be used to honour ongoing commitments to portfolio companies, satisfy the fund’s redemption provisions, and meet operational requirements.
Private debt managers in Canada raise money from investors – often retail investors – and then lend these funds out to borrowers who are unable to obtain traditional bank financing. In exchange for lending to higher-risk corporate borrowers, investors historically received outsized monthly payouts that amounted to about 8 per cent annually.
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