What is a rollover, and what does it mean for my investment?

When you invest in a private credit opportunity on Percent, you are investing in an instrument with a fixed period at a set interest rate and maturity date. These investments often end at their expected maturity date (or earlier if called by the Originator), with the principal and accrued interest returned, allowing you to invest again in another opportunity on Percent.

Other times, however, you can invest in an identical note from the same originator upon an investment’s completion. These investments are known as rollover investments.

What are rollover investments?

Rollover investments allow investors to maintain exposure to the same originator through participating in the refinancing at the call date of the current note. This process enables investors to continue earning interest while also giving the option to invest more or less capital in the subsequent investment.

While these investments might have different interest rates or terms, the originator is the same as the previous investment.

How do rollover investments work?

First, an originator will opt to call a note to increase the invested amount (an “upsize”) or receive revised investor feedback on the interest rate. Investors in notes that are called and set to be refinanced receive a rollover email notification indicating that they can opt to invest in a rollover note. This option also appears under an existing investment on the Percent investment portal under the My Portfolio section several days before the current investment matures.

When you have the option to roll over your investment into the next note, you are presented with the following figures:

Projected Final Value: The projected final value (principal and interest) of the investment you are considering to roll over.

Other Investable Balance: The combination of your available cash balance and the principal and interest from other investments from the same originator that are maturing on or before the maturity of this note you are considering to roll over.

Other Investment Requests: If you rolled over one investment already, the rollover amount is subtracted from the amount you have available to invest.

Total Available Balance: The total available amount you can invest at any given point, factoring all maturing investments, cash available, and other rollover requests

From this screen, selecting Roll Investment will allow you to indicate how much you would like to re-invest in the next offering with the same duration. You can invest less, the same, or more than what you invested in the prior offering, subject to applicable minimum investment amounts.

If you do not opt in for a rollover, you will have their principal and interest returned to their Percent account.

To roll over multiple investments, or to see the answers to frequently asked questions about rollover investments, see our article on “How to Rollover an Investment On Percent.”

Who can invest in a rollover investment?

Investors who already invested in a previous note offered by the same originator have exclusive access to the investment opportunity during the first 24 hours of the syndication window, allowing them to  roll over their investment to a similar note.

After this exclusive window, interested investors are invited to participate in a Dutch auction and are next in line to invest in the opportunity, to the extent that there is remaining allocation net of participation from existing investors.

Finally, any investors who did not roll over their investment or participate in the Dutch auction can invest if there is room after the first two types of investors. If there is remaining allocation to a rollover opportunity after rollover investors and Dutch auction participants have invested, then any Percent user with an active account can participate.

As always, investors will receive deal notification emails when an investment — rollover or otherwise — is open to them.

Scott Steinhardt
Author
Scott Steinhardt
Director of Content at Percent
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