There are risks associated with a scenario where the fund does not have sufficient liquidity to manage the management of the fund's portfolio assets. of capital or liquidation. The fund sees, in addition to the credit risks described in the monthly letter and a challenging market situation, that loans for development properties, properties with investment needs or operating companies that may need financial support or other investments may have problems as a result of the fund not being able to add capital and then possibly receive a substantial negative effect on the fund's NAV. Properties that require investment or have a building credit can have a negative impact on the sales price if the fund does not have the liquidity to finance intended development plans. As a result of the fund not being able to develop the properties according to plan due to liquidity problems, the properties will enter a sales phase as development properties. The consequence of this can lead to a substantially lower sales price and have a negative impact on the fund's NAV. The fund's financed operating companies may be, and to some extent already are, in need of liquidity which the fund will not be able to provide as a result of the liquidity situation and the fund's liquidation. The effect of one or more companies going bankrupt can have significant consequences for the fund's NAV and require larger write-downs. As mentioned in the monthly newsletter, the fund sees that certain counterparties have increased risk.
Furthermore, it should also be noted that the fund's total portfolio during Q1 2020 amounted to nearly SEK 5 billion, whereby the absolute majority of the portfolio's credit loans were decided and paid out under the previous manager. In connection with the pandemic and until today, the fund has experienced strong outflows, where the fund's total portfolio today amounts to approximately SEK 2.7 billion. The fund's large outflows have caused individual holdings' percentage of NAV and exposure to be relatively large, which entails an increased credit risk. In the event of a possible bankruptcy in one of the holdings or another credit event, the size of the exposure risks having a significant effect on the Fund's NAV rate. In the current market situation with challenges in the market for refinancing and the sale of companies, some of the fund's commitments are therefore not only large in terms of individual exposure, but also more difficult to divest.
