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VPC Specialty Lending fund kick-starts share buyback strategy

By Daniel Lanyon on 23rd December 2016

The alternative credit investment trust is seeking to close its discount to NAV buy using spare cash to buy its own shares.



The £362m VPC Specialty Lending fund will commence a programme of share buy-backs in a bid to close its 17.3 per cent discount to its net asset value [NAV] in 2017, according to regulatory filings.


The closed-ended fund, which is listed on the London Stock Exchange buys loans from online lenders for its portfolio across p2p or marketplace lending platforms as well as direct lending platforms. Although, it has sold down the former in favour of the latter in recent months and has said it will pursue this futher in the future.


Like its sector peer, the £851m P2P Global Investments fund it has suffered from a bearish market from investors to these vehicles. After VPC Speciality Lending’s launch in 2015 it quickly moved to premium before plummeting to a hefty discount of more than 27 per cent in recent months.


While this has narrowed in the past few weeks, the trust’s board has given the thumbs up for a programme of buying back its own shares in order to further provide uplift to its share price.


The fund published this announcement yesterday, highlighting that the buy-backs will be managed by investment bank Jefferies.


“The company will commence a share buyback programme in light of the significant disparity between the Company's share price and its Net Asset Value (NAV) per share. In this regard, the Board announces that is has engaged Jefferies International Limited as agent to execute share buy-backs on behalf of the Company,”  the firm said in a statement.


The fund’s managers said they are still “committed to delivering the targeted 8.0 per cent net dividend in the medium term which, in the Company's opinion, should lead to a narrowing of the discount over time.” The programme is now live and will “unless extended or terminated earlier” end in six months.


Andrew Adcock, chairman, said: "we believe that a share buyback programme is a sensible deployment of our capital and we are taking this step as part of our wider strategy to improve returns for our shareholders."



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