CVC Income & Growth Ltd (LSE:CVCG) lead fund manager Pieter Staelens joined Proactive's Stephen Gunnion to discuss the company's European credit strategy and how it generates regular income and capital appreciation.
The strategy invests in a diversified portfolio of European sub-investment-grade corporate debt, focusing primarily on senior secured floating-rate loans and bonds near the top of a company's capital structure, backed by corporate collateral. "Our core objective is to deliver regular resilient income, with an element of capital appreciation," Staelens said.
The fund operates two sleeves: a performing credit sleeve that buys loans at par and collects coupons, and a credit opportunities sleeve that targets discounted underperforming loans where recovery could push values back towards par. Staelens highlighted valuation anomalies created when rating downgrades force passive funds to sell indiscriminately, creating potential opportunities for active investors. The fund favours established businesses with pricing power and tangible assets, while remaining selective in asset-light sectors such as software.
The discussion also covered a proposed placing and retail offer, investor demand and the appeal of floating-rate credit in a changing interest rate environment. Details of the offer can be found here: https://www.londonstockexchange.com/news-article/CVCE/wrap-retail-offer/17677161
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