AI Magazine Issue 10 2018

40 Acquisition International - Issue 10 2018 Drawing on more than an aggregated 100 years of local investment experience in the Brazilian market, Prudent Group, through its innovative Prudent Investment Fund (PIF), offers investors a unique opportunity to participate in this dynamic market. Having recently awarded the firm Most Outstanding Hedge Fund Manager – 2018, we profiled it to find out more. ince 2014, Prudent Group has been managing the PIF and managed account relationships, and has flourished from a small enterprise into a renowned bastion of hedge fund management. Initially, the focus was capitalizing on inefficiencies within Brazil’s capital markets and more specifically the daily challenges that Brazilian small to medium- sized enterprises (SME) face in respect to funding their working capital needs. Unlike their counterparts in the developed world, access to working capital is significantly restricted and costlier throughout Brazil. While the top tier of Brazilian companies readily have access to traditional banking services, even the highest-grade credits can expect to pay 10%+ per annum. For SMEs, the cost of a bank line can be prohibitive and reach up to several percentage points per month. Part of this is due to the lack of competition, with the top five banks effectively controlling access to lending and focusing mainly on servicing the needs of the largest corporate entities. This lack of competition and the inherent inefficiencies have led to the emergence of a robust alternative banking market, mainly through the development of the Brazilian receivables financing market, whose size is now estimated at around $500bn per annum. Short-term financing through the discounting of receivables (purchase orders), is nothing new in the world of trade finance, but the opportunity to enter this market in Brazil and offer a product to global external fund investors, is something that has taken the Prudent team many years of planning and careful implementation. From the very beginning, the success of the venture has been based on attracting the best possible Prudent Investment Fund Investor Relations Team [email protected] 1+ 786 568 6234 www.Prudentgroup.US Extraordinary Achievements S 1807AI66 talent and building a unique operating platform. From modest beginnings in 2014, Prudent Group has expanded their presence to Sao Paulo, Rio de Janeiro, Porto Alegre, the Cayman Islands, Miami, Vienna and Luxembourg boasting a local staff of approximately 150. Over the years, the firm’s investment process has been centred around a banking model, with fail-safe levels of credit checks, transaction monitoring, and over-collateralization. All of the firm’s lending is short- term in nature, with loans on average maturing in 60 days. The loans are backed by the balance sheets of both the borrower and the final purchaser of the product. Prudent does not rely on third parties to originate or purchase loans, instead their sales teams identify and recruit only the borrowers that meet their strict credit standards, after an exhaustive due diligence process. Once these criteria have been met, only then will these candidates be short-listed and presented to the firm’s credit committee. Because of the over- collateralization of these loans and the group’s meticulous risk control process, its default rate has been marginal. This process has resulted in a four- year audited track record with mid-teens returns in U.S. dollars and no monthly drawdowns in the Luxembourg-based Diversified Corporate Lending Fund. This consistent performance has led Prudent Group to be recognized as a serious player in the emerging markets credit space. The group’s concept, has now been validated, not only evident by its growing AUM in the Diversified Corporate Lending Fund, but also with Prudent recently being awarded a market leading institutional mandate. This recent mandate speaks not only to the unique nature of their product, but also the barriers to entry into this credit niche. Effectively without a significant presence on the ground and a local infrastructure in place, it would be almost impossible for international investors to successfully enter and profit from the Brazilian receivables market without a local partner. Having established a strong foundation, with total committed assets of over $500mm, with an experienced local team in place, Prudent has rolled “The Investor Relations Team is led by two individuals who will utilize their distinct experience to offer unparalleled expertise and service to the firm’s investors.” Mr. Jurgens Mr. Mahar