Angel Oak Capital Advisors priced a registered public offering of 4.05 million common shares of the Angel Oak Dynamic Financial Strategies Income Term Trust, a closed-end fund that invests primarily in community bank debt assets and nonbank financials. The fund is listed at a public offering price of $20 per share. In addition, the fund granted the underwriters a 45-day option to purchase an additional 606,485 common shares to cover any overallotments. The offering is subject to customary closing conditions and is expected to close June 30.
The fund will have a broad mandate, allowing the Angel Oak team to invest across the financial spectrum. Alongside community bank subordinated-debt investments, the fund may also invest in nonbank financials, such as brokerage and advisory firms, asset managers, real estate investment trusts and business development companies. At least 80% of the fund’s portfolio will be publicly rated investment grade or, if unrated, scored as investment grade by Angel Oak’s proprietary BankSURF credit-quality assessment model.
“The focus on investment-grade assets with a range of investment opportunities makes this a potentially compelling strategy for investors in today’s environment,” Cheryl Pate, CFA, portfolio manager at Angel Oak, said. “We view now as a great time to enter the community bank sector and other nonbank financials, particularly insurance companies, due to attractive underlying fundamentals. Investors tend to be underallocated to banks and insurance broadly, and we believe this strategy is an attractive way to gain financial exposure and access nonbank financial tactical opportunities.”
The fund has a limited 15-year term and will terminate on June 30, 2035, although the fund’s termination date may be extended for up to 18 months at the discretion of the board of trustees of the fund.
Angel Oak Capital Advisors is an investment management firm specializing in alternative credit. In roughly six years, the company has participated in more than 200 new-issue deals encompassing more than $2 billion in subordinated and community bank debt.