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July 31, 2013updated 04 Apr 2017 3:01pm

Family office sees smaller company loans as less risk than equities

Ultra high net worth individuals are being advised to step into a lending gap in the UK and Germany as an investment opportunity. The advice comes as traditional lenders move away from smaller companies just as the SME market becomes more dependent on debt according to the European Central Bank.

By Verdict Staff

Ultra high net worth individuals are being advised to step into a lending gap in the UK and Germany as an investment opportunity.

The advice comes as traditional lenders move away from smaller companies just as the SME market becomes more dependent on debt according to the European Central Bank.

This has left an estimated gap where as much as a third of SMEs do not get the finance they need for growth.

 

Annualised Returns of 15%

Multi family office Stonehage, said that filling this gap could return as much as 15% per annum on the investment and are advising as much as 5% of their clients portfolio be put into the market.

John Veale, chief investment officer at Stonehage, said: "The premiums in relation to risk taken are attractive and the risk of capital loss is generally much lower than equities.

"The security afforded to creditors in the UK and Germany is robust, and we only partner with fund managers who undertake rigorous due diligence and invest alongside our clients with their own capital."

The loans will be mostly used for buy-outs, offering a chance for companies to restructure and expand in a challenging environment.

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