Netherlands-based asset manager NN Investment Partners (NN IP) announced the launch of the NN (L) Flex Trade Finance fund, providing institutional investors with access to a conservative portfolio of short-dated trade finance loans which are sourced globally. According to NN IP, each transaction in the portfolio is selected following a robust analysis of credit and environmental, social and governance (ESG) criteria.
NN IP stated that it believes that trade finance can be a catalyst for sustainable and economic growth. According to the firm, the $15 trillion trade finance market has historically been dominated by banks, but can offer significant benefits to institutional investors, providing a potent portfolio diversifier that offers a yield pickup over liquid credit and that is efficient from a solvency capital perspective.
The fund’s investment strategy focuses on well-rated loans that facilitate a specific sale of often essential goods, which are supported even under stressed market conditions. According to NN IP, the firm assesses transactions on ESG criteria using a specific framework for trade finance, and aligns each of these with the Sustainable Trade Criteria from the International Chamber of Commerce. NN IP also applies proprietary policies with a focus on financing sustainable goods with positive social impact (encouraging responsible consumption) and restricting the financing of goods with negative impact, such as coal, crude oil and tobacco.
NN IP said that it is partnering with London-based trade finance provider Channel Capital Advisors LLP on the new fund, in order to enhance and complement its own sourcing and pipeline management capabilities.
Suresh Hegde, Head of Structured Private Debt at NN IP, said:
“In the current low-interest-rate environment, there is growing demand for trade finance amongst institutional investors. Building on our 10-year track record in financing international exports, we have spent a considerable amount of time assessing the short-dated trade finance market. We are delighted to offer a strategy which allows institutional investors to benefit from the attractive characteristics of these assets in a robust and responsible manner, without adding undesirable idiosyncratic risk.”