After much hint dropping and consideration, P2PGI has confirmed its intention to raise in excess of £250m in a new C Share issue.
The announcement comes following significant investor demand, and will likely take place in late July 2015. As we discussed when the whispers of this issue first surfaced, existing C Shares will be converted into ordinary shares prior to the issue of the next batch of C Shares. P2PGI will supposedly have fully deployed the £250m that was raised in the last C Share issue by the end of June.
In addition to confirmation of the next C Share issue, the investment trust has also announced a proposed £21.5m Tap Issue (1,999,999 shares at a price of 1075 pence per share) at a 7.3% premium to NAV, via an accelerated book-build. Liberum and J.P. Morgan Securities plc have been appointed as joint bookrunners for the Tap Issue. Demand is again the driver, but in this instance it is demand from the platforms themselves. P2PGI proposed the tap issue in response to newly unearthed lending opportunities, which placing agent Liberum has described as “over and above anticipated planned deployment”. The time-specific nature of these clearly valuable lending opportunities is such that the tap issue will be completed ahead of the next C Share issue.
The company’s existing C Share capital – which were first issued in January 2015 – were 72% deployed at the end of May, and 89% deployed by June 16th. The month of May stood out as a record month in terms of pace of deployment. We learn from Liberum that P2PGI now holds relationships with 14 different platforms. In terms of geographical and sectoral distribution, 80% of the C Share capital has been assigned to US loans (74% in the consumer space, 6% in SME loans), 16% of total deployment has been allocated within Europe, 3% in equity and 1% in Asian consumer. The figures are a telling reflection of how far the P2PGI net has spread.
P2PGI’s monthly report for May pointed to NAV growth of 0.71% for the company’s ordinary shares and 0.39% for the C Shares – the highest monthly return for both share classes. The NAV return for the ordinary shares in May equates to 8.5% on an annualised basis, or 7.1% based on the return over the past 3 months. But as Mike Baliman recently outlined in an insightful AltFi Investor column, only through fee structure transparency and comparison against a suitable index can the real value-added of a Closed End Fund (CEF) be determined – and both are lacking in this instance.
Still, P2PGI is streaking away from its competition within this increasingly hotly contested niche. Listed competitors include VPC Specialty Lending Investments and Ranger Direct Lending – between which £355m has been raised via share issue. P2PGI alone has already raised and almost completely deployed £450m – today’s news of the potential for £270m in extra firepower notwithstanding.
Both of P2PGI’s past share issues have been swiftly oversubscribed. Reports of strong demand for the next round come as no surprise. Indeed, our conversations with investors and market participants suggest that the next issue is already underpinned by expressions of interest amounting to at least the full £250m.
P2PGI’s example has given rise to the above-mentioned VPC fund, Ranger, more recently Rozes Invest, and most recently RiverNorth Marketplace Lending Corporation. P2PGI is ahead in terms of firepower and platform partnerships for the time being, but seems to be cognizant of the fact that this is not the time for resting on laurels.
“P2P Global Investments is at the forefront of a sector which continues to develop and expand significantly. We now have relationships with fourteen of the world’s leading platforms, up from seven at the beginning of the year, and an interest in over 160,000 individual loans, giving us scale and diversification.”
“We continue to see attractive new lending opportunities and we are carrying out the Tap Issue ahead of the proposed New C Share Issue in order to capitalise on certain high-quality and time-specific investments which we have recently identified. We believe it is beneficial to shareholders for the Company to take advantage of these opportunities and maintain its market-leading position.”
“The Tap Issue is at a premium to the most recent NAV and is therefore value accretive for our existing shareholders. Our focus on investing in high-quality loans, while also accumulating equity in platforms via options and warrants, is unchanged and we aim to deploy the money raised in a matter of weeks.”
“The Company has paid three successively increasing dividends and is ahead of schedule in deploying the capital raised in January 2015. Our proposed issue of further new C shares will give us even greater scope to deepen our relationships with platforms and to continue to seek to deliver an attractive level of return for all our investors.”