A new insurance-linked securities fund vehicle called DCG Iris is to launch in June. It will be listed on the London stock exchange as a kind of feeder-fund for Credit Suisse, according to reports in the financial press.
DCG Iris is an ILS fund vehicle which is being launched by investment manager Dexion Capital. Essentially it will be a closed-ended version of a Credit Suisse fund, as all of the capital raised from the listing will be invested in the Credit Suisse Low Volatility Iris Plus fund which invests in a portfolio of ILS including catastrophe bonds. The Iris Plus Fund will be a master fund for DCG Iris.
It could be seen as a fund raising venture for Credit Suisse’s ILS investment arm as it will give them access to new sources of capital and new investors via the London stock exchange.
The Financial Times said that the Credit Suisse team behind Iris hope that this will be the first of a number of capital raising vehicles listed in London for them. It’s safe to assume that Credit Suisse are seeking new ways to capitalise on burgeoning investor interest in the ILS and catastrophe bond space.
With DCG Iris it’s thought that Dexion and Credit Suisse will be trying to raise around £200m of capital. Dexion Capital will be managing this vehicle in Credit Suisse’s behalf.
It’s expected that DCG Iris will have a launch date at some point in June and the new ILS fund vehicle is being actively marketed to investors. Once launched DCG IRIS is expected to target an annual dividend of 5%, with the total net return to shareholders, including appreciation, expected to be as much as 7% over Libor. As with all ILS funds volatility is likely to be low, with DCG Iris expected to be 2%-4%.
With this being the first of an expected number of equity type fund listings it seems Credit Suisse are looking to grow their roughly £3.7 billion of ILS fund interests. It comes at a good time for the market when interest is high and the ILS space seems primed for growth.