Benefits of a Shelf in a Volatile Market Environment

Over the last two years, borrowers have faced a sustained upwards trend in interest rates, with an uncertain future trajectory. Whilst opinions vary on future inflation, history invariably suggests that market forward rates are unlikely to reliably predict future rates. Financing requirements have persisted through the current period of market volatility, and companies have been seen to increasingly seek speed and flexibility around access to capital, including for refinancings, M&A and rate averaging.

The Pricoa Shelf is a flexible option for longer term capital:

• Terms and facility fully documented upfront
• Companies may elect for an initial draw at close, or leave the whole Shelf undrawn
• Future draws (priced at that time) in multiple increments, or a single draw

The benefits of a Pricoa Shelf facility:

• Speed to draw on short notice‍
• Flexibility to draw incrementally‍
• Diversification of funding sources‍
• Low cost of carry

Since 1990, we have provided over 1,200 Pricoa Shelf facilities, aggregating over £100 billion to issuers globally.

Below we highlight a recent Shelf transaction with an initial draw on the facility used to refinance existing borrowings, and the remaining Shelf capacity providing a platform for further access to long-term capital.

Transaction Highlight

Impax Environmental Markets plc establishes a multi-currency Shelf with a €60 million initial draw, refinancing incumbent facilities

Impax Environmental Markets plc (“IEM”) is a leading, FTSE 250 investment trust that seeks to achieve sustainable, above market returns over the long-term by investing globally in companies active in the growing Resource Efficiency and Environmental Markets, with a net asset value of c. £1.3bn (as of 31st August 2023).

In July 2023, we established a Pricoa Shelf for IEM, and in September, funded a €60mm initial draw to refinance existing facilities, and support a modest increase in gearing. We provided natural Euro-denominated funding at attractive rates across both fixed and floating tranches. Under the Shelf, IEM is able to draw further incremental capital at short notice, as market conditions are favourable or capital needs arise.

The Trust chose to partner with Pricoa given the speed and flexibility associated with the Shelf, our ability to fund in multiple currencies on a natural basis with flexibility across tenors, fixed-rate and floating-rate structures, and our aligned long-term, relationship-focused investment approach.

"We are delighted to have established a funding relationship with IEM and believe that a Pricoa Shelf provides great flexibility for the Trust’s future capital needs. We continue to have strong appetite to partner with high quality investment trusts, and we look forward to working with IEM over the coming years.”

Adam Shield, Vice President
Pricoa Private Capital

Our Approach

Pricoa Private Capital is one of the largest private debt providers globally with US$98 billion of investments across 15 international offices. In the UK, we have a long history of partnering with businesses and currently have $11.7 billion invested across over 120 companies and institutions in a wide range of sectors (as of 30.06.23).

Our bespoke funding capabilities span the entire credit quality spectrum, including everything from high investment grade fixed-rate private placements, to below investment grade and junior capital. Pricoa is a buy-and-hold investor, with investments starting from £10 million to larger hold sizes in excess of £300 million.

We have a relationship-centric approach and partner with management teams by providing long-term patient capital to fulfil strategic objectives, diversify funding sources, fund growth capex or acquisitions. Our teams are focused on regional markets and maintain direct relationships with a wide range of institutions, across FTSE 350 companies, privately-owned mid-market businesses, non-public institutions and charitable entities. To learn more about the partners we work with, visit our case study pages.