With the current economic and banking environment, as well as short / medium term market prospects, a significant number of financial institutions with consumer lending operations across Western and Eastern Europe may wish to dispose of certain performing debt portfolios.
Our Lumix IJ Credit Fund offers straightforward solutions to vendor institutions that seek to leave specific geographical retail markets or segments and the associated consumer loan portfolios that need to be managed / serviced until they are run down.
The Credit Fund can consider most forms of non-delinquent consumer lending portfolios, notably unsecured personal loans of all types and credit card outstanding balances. It will not originate new loans, and does not intend to function as a formal financial institution in any geography. In parallel, Intrum may consider purchasing any sub-performing and written-off assets associated with a particular portfolio, which it will fund through its existing internal sources of finance.
Outline of a typical transaction
The Credit Fund concludes each purchased debt transaction with combination of equity, provided by the Fund, and debt, with vendor financing being our preferred option.
Each Credit Fund investment is structured as a stand-alone securitization transaction, with the acquired loan portfolio being funded by two tranches: a senior tranche provided by vendor financing and an equity tranche provided by the Credit Fund. Financial institutions that sell their portfolios to the Credit Fund normally provide vendor financing through a loan note that is senior to the equity portion held by the Credit Fund.
The Credit Fund holds 100% of the equity participations in the SPVs set up to purchase single or multiple credit portfolios (true sale transactions), with bespoke features and structures in line with legal, tax, accounting and management considerations for each particular transaction.
Intrum and each SPV enter into an arm's length servicing agreement by which Intrum has an exclusive mandate to manage all aspects of portfolio servicing and management. Lumix Capital Management, as the investment manager, remains an independent party according to its fiduciary responsibility to the investors in the Credit Fund
Investors in the Credit Fund are qualified investors as defined by the BVI Financial Services Commission. Lumix Capital, Intrum, and/or other related parties may or may not be investors in the Credit Fund.
