Barak Fund Management, an Africa-focused alternative investment manager that froze redemptions for three funds last year in the wake of the Covid-19 pandemic, has pressed the reset button for its operations.
The fund house has lifted the suspension on the three funds and has decided to wind them down.
At the same time, it has also decided to establish two new funds to suit the current credit opportunities while retaining the core of impact-oriented private credit lending opportunities. The new funds will be established in the Cayman Islands and named the Emerging Markets Term Fund and the Emerging Market High Yield Fund.
Barak joins a few other Africa-focused credit fund houses like Vantage, which recently marked the first close of its fourth mezzanine fund with commitments of $207 million. Tunis-based BluePeak BluePeak Private Capital also hit the first close of its maiden $200 million credit fund recently. Altica and Greenpoint are also in the market to raise their Africa credit funds.
Barak said it anticipates that most banks will focus on restructuring their portfolios, rather than extending new lines of credit.
“Coupled with this, the strict BASIL requirements limit lending by banks to these markets. Non-bank specialist financial lending institutions such as Barak are therefore well placed to step in, and selectively provide flexible, bespoke solutions to borrowers whilst providing investors with attractive, risk adjusted returns,” it said.
The firm is opening an office in Abu Dhabi Global Market (ADGM). The new funds that will be managed from it will have a similar investment strategy with an expanded geographical focus into the Middle East, in addition to Africa.
Barak said it has received support from Middle East-based investors who will invest in these new impact-oriented alternative lending funds once registered. Some of these investors have completed due diligence on Barak.
Since its founding in 2008, Barak has established seven funds with total assets under management of $1.3 billion. Its flagship fund, the Barak Structured Trade Finance Fund, is one of the largest of its kind in Africa, achieving cumulative returns of 129% over 11 years (up to 2020).