Noble Fund Management, the investment management unit of UK investment bank Noble Group, has raised a £45 million (€67 million; $84 million) venture fund to provide asset-backed finance to growth companies throughout the European Union.
Noble Venture Finance I Limited Partnership (NVF), the firm’s first venture finance fund, has raised capital commitments from an undisclosed group of venture capital investors and institutions.
Venture finance typically comprises leases, loans or hire purchase facilities to provide working and/or fixed capital for assets such as manufacturing equipment, computers, telecommunication systems, laboratory test and measurement and other equipment. NVF will, in turn, own or have a charge over the assets of the company until the financing is amortised, usually over 36 months, and will then offer the assets back to the company at a pre-determined price.
The fund will invest in growth companies that have recently received a round of funding from leading venture capital firms, and will underwrite and syndicate financings in both euros and sterling in the major markets of the EU. “The portfolio will be well diversified as to VC relationships, sector, geography and maturities,” the firm said in a statement.
Noble said that overall returns will be made up of transaction fees, monthly payments, residual values in the assets at the end of the loan life and an equity kicker. NVF will seek warrants or share options in each investee company, expected to be at a coverage value of 20-25 percent of the committed amount of the finance facilities. These warrants or share options are usually exercised in the event of a trade sale or an IPO of the company.
“[The fund] builds on our strategy that concentrates on alternative investment classes that deliver income generation with an equity upside,” said Henry Chaplin, chairman of Noble Fund Managers. He added that the fund would be particularly active “in the expanding high technology and life science fields.”