Montreal-based Cordiant Capital has launched its latest emerging markets-focused debt fund targeting $1 billion.
Cordiant Emerging Loan Fund IV came to market in late 2011 and has secured a “sizable amount” of capital from a single anchor investor, managing director Even McCordick told Private Equity International. Fund IV will continue the strategy of the firm’s previous debt funds by lending to emerging market companies in a variety of sectors but with a special focus on infrastructure assets. The firm is expecting to hold a first close before the end of the year.
Fund IV’s target is more than double the size of Cordiant’s previous vehicle that collected $460 million in 2007. The firm’s second debt fund collected $370 million in 2004 after raising $360 million for its debut vehicle in 2001.
Fund IV will likely invest between a third and half of its capital in infrastructure transactions, with the rest spread between manufacturing, services and financial services.
All four of the firm’s emerging market debt funds are sector and country agnostic.
“We try to diversify and keep our exposure to any given country typically below 10 percent,” McCordick said. “Brazil is a case where we’ve gone a bit above that for reasons that have to do with our level of comfort with that country.”
The firm typically does not invest above 10 percent of any fund into a specific sector outside of infrastructure.
“In our existing debt funds we focus on senior secured lending but we do a small amount of mezzanine as well and in this fund we will do up to 20 percent in mezzanine,” McCordick said.
Cordiant has not used placement agents for any of its debt funds and will not engage a sales representative for Fund IV. Roughly 95 percent of limited partners in Cordiant’s funds are large pension funds and insurance companies.
“We’ve been active [with LPs] primarily in Europe and Canada historically but we’re trying to expand our reach,” McCordick said. Fund IV will aim to make between 35 and 45 transactions, the same number of deals as its previous vehicles, but will target larger loans than its last three funds, which average between $10 million and $12 million per investment.
Cordiant invests frequently alongside roughly a dozen international finance institutions including the International Finance Corporation and the European Bank for Reconstruction and Development. The firm also makes private equity investments from the $212 million Canada Investment Fund for Africa, which it co-manages with Actis.
Last December, Cordiant invested $15 million in an $864 million project for the construction of a deepwater oil and gas drillship in Brazil, a country in which the firm has periodically invested more than 10 percent of its previous funds.
Founded in 1999 by Carl H. Otto, one of Canada's most influential investors, Cordiant has completed transactions in a diverse group of countries including Argentina, Brazil, China, Russia and India.
“We’re getting prices that are very attractive because of their location,” McCordick said. “That’s kind of the opportunity that we present.”