09.09.2019 HÉRA Holding, technical advisor to Héra Zest NPE fund
Zest Asset Management has launched its first fund specializing in real estate-secured distressed loans. Named Héra Zest Npe Fund, this alternative investment fund will purchase NPE (non-performing exposure) from banks or other institutional organizations to turn them into value creation projects.
A closed, 8-year duration Euro-denominated fund, the Hera Zest Npe Fund aims to raise 200 million Euros. A variable capital fund established in Luxemburg as a RAIF (Reserved alternative investment fund), it aims to cater to institutional investors, family offices and the private banking sector. It can be subscribed to through Aqa Capital Management. The target investment is outstanding single-name debt, such as non-performing (NPLs) or Unlikely to Pay (UTP) loans. The Fund will deal exclusively with single-ticket credit guaranteed by individual property, mainly in the residential, hospitality and retail sectors with a gross book value of between 10 and 50 million Euros. Zest Sa, the independent Swiss asset management company will be the Fund’s investment manager while Héra Holding Spa, a company specializing in value creation from real estate underlying NPEs will act as technical advisor for selection, due diligence and value generation of the Fund’s credit portfolio. Impaired loans will be purchased via a securitization vehicle provided for under Italian law 130/1999. “The non-performing loan market in Italy offers interesting opportunities, as it is secured credit sold at prices ranging from between 30% and 40% of their gross value”, explains Antonella Ponte, an alternative investment specialist at Zest. “Our objective is to create value from these outstanding loans, looking at them on a case by case basis to generate significant capital gains for Fund investors. It should be remembered that while the ECB continues its pressure on banks to maintain capital requirements, the market is short on technical and sector-specific know-how of this type of credit, especially UTP positions, the most difficult to manage since the debtor is still operational and almost always involved with several banks at the same time. That’s why partnering with a specialist in the field like Héra Holding is key to the Fund’s success”.