Ranger Direct Lending’s future still in doubt, say analysts

By Daniel Lanyon on 9th May 2018

Alternative Credit

The fund’s shareholders are increasingly split on the future of the portfolio.

Ranger Direct Lending’s future still in doubt, say analystsImage source: https://goo.gl/cMyqi9

Activist investors in the Ranger Direct Lending fund - Oaktree Capital and LIM Advisors - have waded back into the on-going debate about the future of the troubled portfolio.

The shareholders are both proposing the appointment of two additional directors at the investment trust’s next AGM while LIM Advisors is also proposing the removal of Ranger’s chairman.

Oaktree, in its third public letter (published yesterday), the first of which a fortnight ago called for the portfolio to be wound down, nominated Greg Share and Dominik Dolenec as directors.

Oaktree said in yesterday's letter:   “As outlined in our open letter on May 4[its second letter] 2018, we have been deeply disappointed by Ranger’s Board of Directors, which we believe has repeatedly demonstrated that it lacks the expertise and credibility required to make important upcoming decisions on behalf of shareholders.”

“A series of the board’s poor decisions in recent months, including (i) presiding over the Princeton debacle, (ii) conducting what was, in our view, a flawed and biased strategic review and (iii) exhibiting many examples of poor corporate governance in how these processes have been conducted, have resulted in the destruction of shareholder value and a decided lack of confidence in the current Board.”

Share is managing partner of Ambina Partners, an investment firm focused on investing in software and financial services companies. He previously worked at Moelis Capital Partners, Fortress Investment Group and Madison Dearborn Partners. Dolenec is Managing Partner of Emona Capital LLP, an investment and advisory firm focusing on special situation and disruptive technology investments. Prior to Emona, he was at Elliott Advisors. 

Analysts at Numis securities say the renewed fissure among shareholders could mean the portfolio is yet wound up, displacing last week’s suggestion by Ranger that Ares would take over as its investment manager next year.

“The significant differences of opinion between a number of large shareholders and the Board mean that the future of the fund remains in doubt,” Numis said.

Oaktree and LIM Advisors own approximately 28 of the share capital of Ranger, Numis says citing Bloomberg figures, but last week Ranger’s board said 39 per cent of the share capital will support the appointment of Ares as new manager.

“As a result, we expect the vote to be close,” Numis added.

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