CreditEase Wealth Management announces on Monday its Offshore Private Credit Fund (OPCF) has invested a total of $30 million in two transactions with OnDeck and LendingHome. This announcement comes just one year after the fund made its first investment in Avant and Prosper. According to CreditEase Wealth Management, OPCF raised $80 million from its Chinese clients in late 2015 and will be fully deployed by end of this month.
“Over the last several months, we have conducted a thorough screening process where we’ve looked at more than 90 different lending platforms and fund managers across the world. Since the market was volatile in 2016, we have been particularly diligent in our investment program. As one of the world’s leading lending platforms with US$33 billion in loans to over one million borrowers in China, we maintain rigorous due diligence processes and stringent data analysis by leveraging on CreditEase’s long track record and expertise.”
CreditEase Wealth Management also reported that it considers OPCF the first Chinese offshore fund to invest in loans issued by western platforms. The fund provides Chinese high net worth and mass affluent investors the opportunity to spread risks across different geographies with exposure to Western private credit. Mikael Nabati, Chief Investment Officer of OPCF, also commented:
“We are thrilled to work with another two leading marketplace lending platforms in the US. We initially invested in two consumer lending platforms. This year, we decided to invest in the SME and real estate sectors to further diversify our portfolio. We were able to structure a unique asset-backed lending transaction with OnDeck that ensures stable returns for our investors and low volatility compared to a traditional whole-loan purchase. We believe that the ‘fix-and-flip’ loans originated by LendingHome offer attractive risk-adjusted returns and compelling diversification benefits.”
Nabati went on to add:
“Although the rate hike announced by the U.S. Federal Reserve recently was only the third increase since the global financial crisis in 2008, the pace seems to have picked up and three more hikes are expected in 2017. We continue to see strong demand for shorter duration marketplace lending products given the limited sensitivity to interest rate movements make the returns of these products more stable and reliable. Now that our first fund is close to be fully deployed, we are planning for our second fund with a fundraising target of US$200 million. OPCF II will focus on the same asset class but with a different and innovative fund structure to meet with our clients’ needs for products with different durations. While OPCF has exclusively invested in U.S. platforms to date, we are actively looking at new geographies, such as Australia and Europe, as well as new credit products, such as student loans, invoice factoring and agricultural loans.”