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Overview

The Carbon Fund is being founded to provide trade finance to well-established diamond traders and manufacturers who are active in the midstream of the diamond value chain, with a strong focus on the rough diamond trade. Carbon Fund cuts away a lot of the red-tape which currently exists with the traditional banks, while at the same time reducing the actual credit risk.

Key Facts
REGULATION Domiciled in the DIFC and registered with Dubai Financial Services Authority (the “DFSA”)
TYPE OF FUND Open-Ended
CORPORATE STRUCTURE A Shariah Compliant Protected Cell of the ‘Carbon Investments PCC’
MINIMUM INVESTMENT USD 1 Million
MINIMUM AUM USD 100 Million (required to cover operational/legal/set-up expenses of the fund)
SCALABILITY USD1 bn (the fund can be scaled without reducing credit quality)
CAPACITY UTILIZATION RATE 90% -95% of the available funds
CURRENT GROSS RETURN 7.8% (based upon current LIBOR)
CURRENT NET RETURN 6%
PROFITS DISTRIBUTION Quarterly
FEE STRUCTURE 1/10 (Annual Management fee – 1% of AUM*, Performance fee – 10% of Profits)
HIGH LIQUIDITY If less then 5% of AUM* are redeemed, payment will happen within 30 days
If 5%-33% of AUM are redeemed, payment will happen, end of the quarter + 90 days
If 33%-66% of AUM are redeemed, payment will happen, end of the quarter + 180 days
If 66%-100% of AUM are redeemed, payment will happen, end of the quarter + 360 days
PENALTY FOR EARLY WITHDRAWAL 2.5% for the funds redeemed within the first year of investment
Criteria for Clients
Company’s experience in the business min 20 years
Company’s Consolidated Equity min USD30 Million
Company’s Consolidated Turnover min USD200 Million
Existing trade finance available from specialized banks min USD20 Million
Global presence Offices in all the major diamond hubs
Market reputation Impeccable
Value Propostion

A Compelling Private Debt Opportunity for Institutional Investors Seeking Sources of Attractive Risk-Adjusted Returns

Attractive Returns

Fund financing offers higher yields compared to public bonds: floating rate (LIBOR + spread ~5%) vs fixed rate (4.95%)

Reduced fraud risk

Substantially reduces the ‘accommodation’ or ‘fraud’ risk which exists with current structures used by banks, like invoice discounting or receivable securitization

Short financing cycle

The financing cycle is very short with receivable tenors of 30-165 days; average receivable tenor would be 90 days, with a 30 days grace period, which is in line with industry standards.

Dual recourse

Seller provides a guarantee in case of non-payment by Buyer. If Buyer has not made the payment 15 days after the grace period, Seller makes the payment within 7 days as per the guarantee issued

Reduced risk of bad loans

As no ‘credit limits’, ‘facilities’ or ‘loans’ with fixed tenors are issued, it is much easier and faster to reduce exposure to certain entities in case of a deterioration in their credit worthiness. Simply no new purchases are made from a certain Seller (if the credit worthiness of the guarantee deteriorates), or no new sales to a certain Buyer is made if that Buyer always pays late

No initial set-up costs

The set-up cost for a receivable securitization structure is quite high, so only a handful of diamond companies have access to institutional investors. The other way around as well, investors only have access to a few diamond companies who can normally command low returns. The fund structure is much more scalable as a lot of triple A clients can get finance without having to do any initial legal set-up cost, which automatically increases the returns for the investors