Exclusive: P2P Global Investments initiates share buybacks amid market sell off

The largest closed-ended portfolio offering exposure to the P2P/marketplace lending space the £871m P2P Global Investments trust has bought back its own shares for the first time in the Brexit market sell off, according to filings to the London Stock Exchange.

Markets have seen a welcome bounce this morning they are still down from their pre-EU referendum levels and while professional investors and analysts have pointed to the buying opportunity this presents for P2P/marketplace lending there is a heightened bearishness persisting. 

The likes of the P2P Global Investments trust and VPC Speciality Lending trust have suffered from the market sell off with the formerdown 8 per cent as shown in the chart below although they have stayed ahead of the broader market.

Performance of P2P GI over 5 days

Source: Google

Even before the sell off last Friday, many investors in these trusts were hopiong to see greater strength in the trust's share prices which have been hit by a general risk off trned in 2016 as well the fall out from the exit of Renaud Laplanche from Lending Club on unfavourable terms.

However, Buy-backs have been a thorny issue for investors in the investment trust. Some, including the representatives of a large family office have argued that the manages of P2P GI should start to buy back shares to defend the share price from moving to a wide discount.It’s discount currently stands at 20.3 per cent, in contrast to the near 18 per cent premium it sat on in its first six months after its launch in 2014.

Performance of discount/premium 

Source: aic

The lead manager of P2P GI Simon Champ made the argument in an exclusive interview with AltFi recently he believed the fund’s cash pile of £400m was better spent on negotiating strategic loan purchases from platforms rocked by the Lending Club fiasco than it was from buying back shares.

However, it should be noted that the purchase yesterday was a small purchase. P2P Global Investments purchased 23,421 of its ordinary shares at an average price of 804.3 pence share. All of these shares will be held as treasury shares.

A spokesman for P2P GI said: “As part of our discount management policy, the board has the discretion to order the manager to buyback shares opportunistically and decided it was the right thing to do during the exceptional dislocation which occurred after the UK referendum result. However, our main focus continues to be the multi-year opportunities in market place lending which we are seeing now and which offer attractive returns to shareholders.”

There are 86,306,803 ordinary shares in issue, therefore the total number of voting rights in the trust is 86,283,382.