The listed direct lending portfolio has added more investor cash in a bid to increase its leverage and raise its yield.
The alternative credit investment trust Ranger Direct Lending has completed a £30m placing of new zero dividend preference Z shares, according to regulatory filings to the London Stock Exchange.
The investment trust, which launched in May 2015, is focused on investing in loans originated by direct lending platforms that are generally secured against assets with a typically low duration of around two years. Prior to this latest round of fund raising it was £155m in terms of the size of its assets.
The Z shares have a life of five years and a redemption yield of 5 per cent per annum and therefore a final capital entitlement of 127.63p per ZDP Share on the ZDP repayment date. A new wholly owned subsidiary of the fund, Ranger Direct Lending ZDP, has been formed to issue the ZDP Shares. This is expected to take place at 8am on 1 August 2016.
The fund is now sitting on a yield of 10 per cent, according to data from the Association of Investment Companies, although this comes at a time when it is also discounted by 15 per cent to its net asset value. It is targeting a 10 per cent yield at issuance price.
Like many of its peers in the closed-ended alternative credit space, Ranger Direct Lending has spent the first half of 2016 sitting on a substantial discount in comparison to 2015 where – like its peers – strong demand pushed it onto a substantial premium.
The fund is managed by Jack Antonini, Kenneth Scott Canon, Mark Dawson, William Kassul, Wes McKnight and Gary Melara. Ranger Direct Lending has a 1 per cent annual management charge and it also charges a performance fee.