Ranger Direct Lending Fund is set to raise more money in a C Share issue.
The fund is planning to raise up to £135m by way of a placing and intermediaries offer. Ranger raised £135m in an IPO on the London Stock Exchange in early May 2015. As of yesterday, 76% of that initial total had been deployed, and Liberum – which is acting as the sole bookrunner in relation to the next C Share issue – has indicated that Ranger expects to have hit full deployment in early December.
The Ranger model differs from that of rival fund structures P2PGI and VPC’s Specialty Lending Investments. Ranger focuses on the direct lending space, as distinct from the marketplace lending sector. The fund currently holds relationships with 10 originators, 3 of which have been on-boarded since its IPO. The advantages of playing in this space, as Ranger describes them, are that direct lenders typically have more established track records than their marketplace counterparts, as well as experienced management teams. Further to this, Ranger is able to actively select loans from its partner platforms’ portfolios – which Partner Bill Kassul sees as a crucial means of generating alpha. It’s rather difficult – in the UK especially – for funds to “cherry pick” loans from marketplace lenders, owing to the conflicts of interest that inevitably arise between the originators’ individual and institutional lenders.
Ranger’s strategy appears to be working thus far. The fund has so far hit its targeted net return of 12-13% (after loan losses and platform fees), and is seeing a strong pipeline of investment opportunities. The platforms that Ranger is currently working with include Interface Financial Group, Biz2Credit, Blue Bridge Financial, Princeton Alternative Funding, Capify (formerly known as AmeriMerchant) and Sharestates. Over 80% of the fund’s lending to date has been secured, and Ranger expects to maintain that exposure at a minimum of 75%.
But how will the C Share issue fare? Recent history would suggest that UK-listed investment trusts are beginning to find it harder to hit fundraising targets. In September, VPC Specialty Lending Investments raised £183m in a C Share offering, but had originally intended to raise £200m. GLI Alternative Finance raised £12.4m through an IPO on the London Stock Exchange in September, which also fell short of the intended mark.
Ranger’s C Share issue is expected to close in late November, with a full prospectus slated to arrive next week.