GLI Plans Falling Into Place

By Ryan Weeks on Friday 4 September 2015

Alternative Lending

Various plans are progressing at the ever-active GLI Finance.

The prominent institutional investor announced in June that it would soon launch a Closed End Fund (CEF) by the name of “GLI Alternative Finance PLC”. The purpose of the fund is to invest across a range of SME loan assets, and we presumed at the time that those loans would be originated by the GLI’s portfolio platforms. The fund will launch via an IPO on the London Stock Exchange.

We now have more colour as to what the investment trust will look like. GLI published its prospectus on Tuesday, announcing that the listing of the fund was likely to take place on 23rd September 2015.

What else have we learned?

  • The loans into which the fund will invest will indeed be sourced – seemingly exclusively – by the 19 alternative lending platforms within which GLI holds strategic equity investments.
  • These 19 platforms will provide diversification across various geographies, asset classes, durations, and levels of security.
  • We knew this already, but the target net dividend yield will be 8% per annum.
  • Again old news: no performance fees will be paid to the Company’s investment manager (which is GLI Asset Management Limited). More details around fees: 0.75% p.a. up to £100m, 0.5% p.a. over £100m, charged on the lower of NAV or market capitalisation.
  • A seed portfolio of existing GLI loan assets – representing over 80% of the minimum target size of the fund itself – will made available for immediate investment. We had previously been told that this seed portfolio would represent 20% of the fund’s minimum target size.
  • In terms of the size of the fund, GLI is planning to issue a minimum of 45 million Ordinary Shares at £1.00 per share. If fully subscribed, this will amount to £45m in fresh firepower. The seed portfolio of GLI Finance Limited loan assets will be worth £39.94 million.

GLI’s fund will be the fourth alternative finance focused, Closed End Fund vehicle to list on the London Stock Exchange. Its predecessors are P2PGI, Victory Park Capital’s Specialty Lending Investments and Ranger Direct Lending – which have raised well over £1 billion between them.

Geoff Miller, CEO of GLI Finance, commented:

"The provision of finance to SMEs globally continues to be problematic, with banks only willing or able to provide finance in large loan sizes on very straightforward credit terms or to smaller companies with impeccable credit, presenting the alternative finance market with multiple opportunities.”

“We believe that the Company will offer investors an alternative way to invest in SME finance assets. Firstly, the loans invested in will be originated principally through the 19 lending platforms in which GLI Finance Limited is the principal external equity investor, and therefore this is expected to offer the Company continual access to multiple loan opportunities. Secondly, the loan assets to be acquired will be diversified by duration, security type and geography through the platforms with which GLI Finance Limited is strategically partnered."

Elsewhere in the world of GLI Finance, the company continues to eat up Platform Black shares. GLI increased its stake in Platform Black from 20% to 31.9% in June, via a share-swap with Louise Beaumont, the Platform Black Co-Founder who recently acceded to role of Head of Public Affairs and Marketing in the GLI mother ship.

GLI has now acquired an extra 12.1% of the company, taking its total ownership to 44%. Platform Black Directors John Regan and Jason Batten have also increased their stake in the company to 20% each.

On the logic of taking on increased ownership of the platform, Mr. Miller said:

"We made our decision to increase GLI's stake in Platform Black in June this year but completed the transaction in two stages in order to allow the other major shareholders the opportunity to join us.”

"We are very pleased to see that they share our confidence in the recent operational and personnel changes at Platform Black as well as the performance of the business."

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