Ranger Direct Lending, a relatively new fund manager offering access to the direct lending market in both the US and the UK has announced that it has raised £14.1m via a tap issue for 9.99% of share capital at £10.45, representing a 2.7% premium to the 30 November NAV (post-dividend). This surprise development came just days after news that it had canned a much bigger fund raise amounting to £135m.
The key change seems to be that a small number of large institutional investors were keen to put more money to work in the fund, regardless of the bigger placing. Trans-atlantic investment firm Invesco Asset Management took up 89% of these new additional shares.
But this focus on just a small number of influential shareholders does seem to have added a small complication – INVESCO’s stake will increase from 29.5% to 34.9% of share capital. As a result, according to investment trust analysts at Numis the issue apparently remains “conditional on receiving a waiver from the Takeover Panel for Invesco to make a mandatory offer due to its holding being more than 30% of voting rights.” Under stockmarket rules any investors with more than 29% of the shares is required to make an offer for the whole shareholder list – unless the rest of the investors agree in advance (called a whitewash resolution).
Dallas based Ranger raised £135m at IPO on 1 May 2015, targeting a yield of 10% pa through a portfolio of debt obligations (loans, invoice receivables and assets financing arrangements) originated by direct lending platforms. The portfolio invests across various categories including secured SME lending, real estate loans, equipment finance and platform collateralised debt.
The US based manager has been busy since launch with full deployment hit within 6 to 9 months following the IPO – the fund was fully invested in December. Crucially the manager appears keen to keep money flowing to its underlying lenders, with the manager claiming that these more opportunities to provide loans in a target return range of 12-13% per annum.
With Funding Circle raising £150m just a few weeks back, this £14m additional tap funding round takes the total amount of money raised for UK listed funds well over £1.6 billion, an extra ordinary number given just how niche the sector is in stock market terms. Crucially institutional investors still seem keen to deploy money on both balance sheet lending platforms and marketplace versions.