Alternatives

Invesco Direct Lending strategy

The strategy offers the opportunitiy to generate strong risk adjusted returns with lower volatility relative to other traditional fixed income asset classes.

At a glance

Invesco’s Direct Lending strategy seeks to directly originate senior secured loans to middle market companies. We believe these loans represent an attractive opportunity for investors to generate strong risk adjusted returns with lower volatility relative to other traditional fixed income asset classes. Our strategy draws upon the team’s significant experience in sourcing and investing in middle market opportunities.

Structural Shift Creates Opportunity

Consolidation and regulatory changes have caused a fundamental shift and has forced traditional middle market financiers such as banks to step away creating an attractive opportunity for investment managers to provide debt solutions.

Large and Growing Market

The U.S. middle market is a meaningful part of the U.S. economy, has been steadily growing, and increasing private equity sponsor activity continues to drive financing needs.

Downside Mitigation

The middle market has historically enjoyed lower default rates on loans, higher associated recoveries and larger equity ‘cushions’; moreover, direct lending has structural advantages to protect lenders including meaningful and customizable covenants.

Goals

The strategy is heavily skewed towards capital preservation with a keen focus on disciplined asset selection and rigorous due diligence. The strategy will primarily target senior secured loans including first lien and unitranche loans.

Strategy overview

  • Direct lending opportunities targeting middle market companies
  • Senior secured loans with a priority position in the capital structure
  • Strong alignment with private equity
  • Investment selection underpinned by institutional sector expertise
  • Selective, conservative and disciplined approach to capital deployment
  • Proprietary framework to evaluate ESG

Target investment criteria

  • Company Size: Middle market companies with EBITDA of $20 - 100 million
  • Seniority: Primarily first-lien and unitranche loans
  • Geographic Focus: Primarily U.S. and Canada
  • Industry Focus: Business Services, Consumer, General Industrial, Healthcare, Telecom, Media & Technology

Why Invesco

  • Experienced Team: 25+ years’ experience building and managing market leading private debt platforms
  • Sector Expertise: One of the largest sector-based loans teams in the middle market
  • Sourcing Network: Middle market sourcing network established over two decades and complemented by $25+ billion currently invested with 200+ private equity firms
  • Credit Discipline: Well-established institutional credit philosophy focused on asset selectivity and capital preservation
  • Risk Management: Emphasis on structure and documentation with significant institutional restructuring resources and experience

Our ability to combine the above strengths with our focus on the ‘core middle market’ distinguishes our strategy relative to competitors.

Meet the team

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  • The value of investments and any income will fluctuate (this may partly be the result of exchange rate fluctuations) and investors may not get back the full amount invested.

     

    Alternative investment products may involve a high degree of risk, may engage in leveraging and other speculative investment practices that may increase the risk of investment loss, can be highly illiquid, may not be required to provide periodic pricing or valuation information to investors, may involve complex tax structures and delays in distributing important tax information, are not subject to the same regulatory requirements as mutual funds, often charge higher fees which may offset any trading profits, and in many cases the underlying investments are not transparent and are known only to the investment manager.

  • Data as at 31 March 2022, unless otherwise stated.

     

    This marketing material is not intended as a recommendation to invest in any particular asset class, security or strategy. Regulatory requirements that require impartiality of investment/investment strategy recommendations are therefore not applicable nor are any prohibitions to trade before publication. 

     

    Where individuals or the business have expressed opinions, they are based on current market conditions, they may differ from those of other investment professionals and are subject to change without notice.

     

    This material should not be considered financial advice. Persons interested in acquiring the products should inform themselves as to (i) the legal requirements in the countries of their nationality, residence, ordinary residence or domicile; (ii) any foreign exchange controls and (iii) any relevant tax consequences.