Calgary-based investment manager Invico Capital Corp. has developed a comprehensive strategy to address redemption requests from major investors in one of its funds, reflecting broader market pressures in the private credit sector. The firm, which manages approximately $4 billion in assets across Canada and the United States, has implemented what it terms a "structured liquidity management plan" for its Invico Diversified Income Fund.
Managing Investor Withdrawals in a Volatile Market
Invico's approach comes as private credit managers navigate increasing scrutiny of liquidity risks within the $1.8 trillion industry. The company has reached out to larger investors who have submitted redemption requests to better understand their liquidity needs while implementing measures to protect the fund's value for remaining participants.
The firm emphasized that its plan balances generating ongoing liquidity for redemptions with preserving the net asset value and yield of the fund, aligning with governing documents and investor expectations. This careful balancing act represents the delicate position many money managers find themselves in as lending practices face heightened examination.
Private Credit's Redemption Challenge
The private credit industry has traditionally marketed higher returns in exchange for reduced liquidity access, yet many funds maintain quarterly redemption options that investors are increasingly exercising. According to sources familiar with the matter, some Invico investors were asked to consult with the firm before filing formal redemption notices and were cautioned that a surge in withdrawals could potentially trigger gating mechanisms.
Gating, which restricts investor withdrawals during specified periods, has become more prevalent across private credit and real estate strategies as higher interest rates and tighter liquidity conditions strain investment portfolios. Invico's communications were framed as proactive liquidity management rather than signaling any immediate suspension of redemptions, though similar outreach at other alternative asset managers has sometimes preceded redemption caps.
Fund Performance and Investment Strategy
Invico's flagship Diversified Income Fund focuses on high-yield credit and energy sector investments across North America, while also providing bridge loans and commercial mortgages to companies seeking growth capital. The fund manages over $500 million and has delivered a 10.1% compounded annual return over the past five years, though performance has moderated to 4.6% in the most recent year.
While energy-related investments have benefited from stronger commodity prices in recent years, funds holding less liquid loans and royalty interests face particular challenges when multiple investors seek simultaneous exits. Invico maintains that it has not requested investors to refrain from submitting redemption requests and continues working collaboratively with dealers, advisers, and investors to manage liquidity prudently.
The firm's proactive approach highlights how private credit managers are adapting to changing market dynamics while attempting to balance investor needs with long-term fund stability in an increasingly complex financial landscape.
