Prudent makes private debt investments primarily through full recourse, short-term loans that are secured by receivables as well as physical collateral and other guarantees.
Over the last 10 years, Prudent Group has built a corporate structure that allows well informed and institutional investors the opportunity to invest in a short-term, corporate lending platform through Luxembourg, Cayman, and Delaware based hedge fund vehicles.
Prudent Group currently manages five core investment strategies offered in various jurisdictions.
Diversified Corporate Lending
Payment Processing Fund
North American Opportunities Fund
Separately Managed Accounts
The strategies managed by the firm share a number of commonalities, typically focusing on working capital financing secured by realizable collateral, such as receivables.
Prudent’s strategies are primarily focused on the Brazilian market where it has gained significant experience and competitive advantage from its years of operation in the country.
Brazil is a world leader in size, population, and most soft commodities but has remained an emerging market due to ongoing political instability, lack of traditional banking/capital markets, and, more recently, one of the worst recessions in the country’s history. Despite these challenges, Brazil’s geographic location relative to North America, Africa, and Europe - along with abundant resources and strong industrial know-how - make it a logical location for corporations to headquarter South American operations.
Capital markets in Brazil are largely inefficient. Large corporations in Brazil have the attention of banks, which cater to the top 10% of companies. As a cost of financing, investment grade, multi-national companies can expect rates between 10% to 14% annually, while high yield companies could expect to pay as much as 20% or more annually.
This leaves a void of financing for the roughly 90% of small and mid-sized businesses (“SMEs”) which serve as local suppliers to blue-chip companies in operation in Brazil. The historical lack of traditional financing to SMEs led to the prominent practice of short-term, working capital lending over the past several decades. Local finance companies, or alternative lenders, providing working capital to SMEs operate in a sophisticated and government regulated commercial receivables market. Prudent Group estimates that the annual opportunity for providing working capital to SMEs in Brazil to be approximately USD $500 billion.