The fund’s latest prospectus indicates it could nearly double its assets next year, believing there is plenty of market potential to deploy new cash.
The £237m Ranger Direct Lending investment may seek to raise an additional £200m through new share issuance in 2017, according to regulatory filings.
Launched in May 2015, the investment trust is focused on investing in loans originated by direct lending platforms that are generally secured against assets with a typically low duration of around two years.
It has been one of the more successful closed-ended online lending funds in 2016, partly thanks to the strong US dollar. The chart below shows its net asset value growth since its launch in comparison to the wider UK marketplace as measured by the LARI (Liberum AltFi Returns Index).
NAV Performance of Ranger Direct Lending Vs LARI
Source: AltFi Data
It has so far raised extra cash through a £23.2m placing of new zero dividend preference Z shares (ZDP) on 4 November and £30m back in July 2016 via another ZDP issue. More recently, it announced that it would raise £40m through a C share issue in December. The prospectus for this round also indicates the managers of Ranger Direct Lending are thinking to raise significantly more.
It puts in place a placing programme of ordinary shares and/or c shares to raise up to £200m including the amount raised under the new issue of £40m.
“The Company believes that Debt Instruments originated or issued by Direct Lending Platforms are an attractive and growing asset class that have the potential to provide higher returns for investors than other, more widely available, fixed income products,” Ranger said in a statement.
“As banks continue to retreat from SME lending as a result of new regulatory requirements, opportunities are presenting themselves for Direct Lending Platforms that typically focus on a particular category of borrower and/or underlying industry asset class.”
Ranger Direct Lending’s board believe that there is substantial available deployment capacity amongst existing and new potential platforms for investments with net returns in line with its risk and return targets.
Liberum Capital and Fidante Partners have been appointed as Joint Bookrunners in connection to the Issue. Stone Mountain Capital has been appointed as placing agent.
Investors with the largest stakes in the fund include: 34.9 per cent Invesco , 12.7 per cent BMO, 5.7 per cent Aviva and 4.6 per cent M&G.
Ranger Direct Lending, which is managed by Jack Antonini, Kenneth Scott Canon, Mark Dawson, William Kassul, Wes McKnight, Gary Melara, is on a discount of 7.4 per cent.