Katch Investment Group: Leading the Way in Private Debt

Q&A with Stephane Prigent, CEO

Q: Congratulations on winning the Private Debt Boutique of the Year in the UK 2024. What does this award mean for Katch Investment Group?

Stephane Prigent: Thank you. Winning this award is a testament to our team’s dedication and the robust strategies we have developed over the years. It reinforces our position as a leader in the private debt space and highlights the innovative approaches we employ to deliver value to our investors. This recognition also underscores our commitment to providing stable, low-volatility returns through high-quality collaterals and geographical diversification. Since our inception five years ago, we have grown to manage over 1 billion USD in assets, which reflects our consistent performance and the trust our investors place in us.

As we continue to build on this success, three strategies stand out for 2024: the Katch European Secured Lending Fund, the Katch Factoring Fund and the Katch Litigation Fund.

Q: Can you tell us more about these three strategies: the Katch European Secured Lending Fund, the Katch Factoring Fund and the Katch Litigation Fund?

Stephane Prigent: Certainly. The Katch European Secured Lending Fund is designed to achieve a sector and geographically diversified portfolio of first-ranking real estate-secured loans. We target professional investors, developers, private equity sponsors, and corporates. Our strategy involves lending at conservative LTVs against the market value of commercial and residential real estate assets, ensuring strong collaterals and clear exit strategies. This fund aims to provide investors with attractive returns in the low teens, backed by the security of real estate assets.

The Katch Factoring Fund invests throughout Brazil, with a focus on the Southern region. It provides funding to small- and medium-sized enterprises through the purchase of invoice receivables and asset-backed lending, such as traditional loans with real estate as collateral. Factoring is a major source of financing in Brazil, and our fund leverages the expertise of our integrated team, who have extensive experience in the local market, to ensure robust risk management and high yields. Historically, the cost of hedging BRL/USD was quite high, affecting the fund’s performance. However, with improved hedging costs, we have seen significant performance improvements in recent months, and we are confident that the fund will deliver returns in line with its target of low teens. This improvement, along with a strong focus on maintaining low default rates through careful selection of invoice sellers and their clients, positions the fund well for success.

The Katch Litigation Fund, on the other hand, focuses on financing a diversified portfolio of short-term legal claims. We provide funding to law firms through loans secured by legal claims and other guarantees. This strategy offers returns in the mid-teens for senior investors. The litigation finance market presents a unique opportunity to achieve high yields while maintaining a robust risk management framework, given the strong legal claims and guarantees backing the loans.

Q: What sets Katch Investment Group apart from other asset managers in the private debt sector?

Stephane Prigent: Our edge lies in our ability to identify niche areas where capital is scarce and take quick action to secure loans with high-quality collaterals. We focus on short-duration opportunities, which provide higher visibility and more liquidity. Our senior-secured lending strategies offer attractive risk-reward profiles, and we emphasize transparency and investor service. Investors have access to detailed portfolio descriptions and can monitor their investments at all times, which sets us apart from many of our competitors. Our global presence, with offices in London, Panama, Brazil, and Switzerland, allows us to effectively manage our diverse portfolio and stay ahead of market trends.

Q: How has Katch Investment Group adapted to the challenges posed by the current economic environment?

Stephane Prigent: The economic environment in early 2024 is marked by a transition from high inflation and previously rising interest rates to a period where rates are expected to begin declining. As inflation pressures ease and central banks start to lower rates, the volatility in traditional asset classes remains a concern. In this context, alternative investments like private debt have become increasingly important for portfolio diversification. Our strategies are designed to provide non-correlated sources of returns, making them particularly attractive to conservative investors seeking stable income. We have also enhanced our risk management processes to navigate these changing times effectively.

Q: What are your future plans for Katch Investment Group?

Stephane Prigent: Looking ahead, we plan to continue expanding our range of investment strategies and geographical reach. In January 2024, we launched a new SICAV RAIF (Katch Alternative Funds) and introduced two new sub-funds focused on Litigation Finance. These subfunds aim to capitalize on the growing opportunities in the litigation finance market, offering our investors access to high-potential, non-correlated returns.

We are also exploring new opportunities in the private debt space, particularly in sectors and regions where we see significant growth potential. Our ultimate goal is to remain at the forefront of innovation in asset management and continue delivering superior risk-adjusted returns to our investors.

Q: Finally, what advice would you give to investors considering an investment in private debt

Stephane Prigent: My advice to investors is to thoroughly understand the underlying assets and strategies of any private debt investment. Focus on managers with a proven track record, strong risk management processes, and transparent reporting practices. Private debt can offer attractive returns and diversification benefits, but it’s essential to choose investments backed by high-quality collaterals and managed by experienced professionals. At Katch Investment Group, we pride ourselves on meeting these criteria and providing our investors with the confidence they need to invest in this asset class.