The UK-listed portfolio has carried on its recent re-fresh with a number of portfolio transactions.
The SME Loan Fund has completed a number of transactions with GLI Finance its parent company, according to regulatory documents filed to the London Stock Exchange.
The SME Loan Fund paid £1.55m cash to its parent company to increase its holdings in the loan notes of a pharmaceutical company and a solar energy construction loan, both with interest rates of 9 per cent.
It has also increased its participation in two BMS Finance structures from 10 per cent to 20 per cent as well as reducing its exposure to The Credit Junction Senior Preferred Shares (by $800k) from 3.7 per cent to 2.6 per cent of net assets.
This leaves the weighted average yield on the portfolio as largely unchanged but with an improvement to its credit profile, according to the fund.
The GLI Alternative Finance IT is managed by Amberton Asset Management - which is in turn half owned by GLI Finance. Having launched in September 2015, it’s one of the newest of the five investment trusts that offer exposure to peer to peer and marketplace loans.
Performance of share price vs NAV
Source: Amberton Asset Management
The fund changed its name from GLI Alternative Finance to The SME Loan Fund about a month ago at the same time as appointing Cantor Fitzgerald to act as broker and financial adviser.
It has 81.2 per cent in secured loans and the rest in unsecured loans with its largest geographic exposure being the UK at a total of 71.9 per cent although 18.5 per cent of this is in the form of ‘offshore’ UK exposure i.e the Channel Islands and the Isle of Man and Guernsey.
The US accounts for a further 15 per cent with the rest held in Europe debt as well as some in Sub-Saharan Africa. The Fund pays a monthly dividend and is targeting an outright income level of 8 per cent over a rolling twelve-month period.
Numis Securities’ Ewan Lovett-Turner notes the portfolio of the SME Loan Fund is more concentrated that the other listed comparable portfolios. Prior to these transactions, he says, the four largest loans each representing over 2 per cent of gross assets and the top 10 represent c.20 per cent of the portfolio. I
“in contrast, the other funds are widely diversified. For example, Funding Circle SME Income largest loan is 0.6 per cent of net assets, with exposure to over 2,200 loans, whilst P2P Global Investments and VPC Speciality Lending have exposure to over c.138,000 and 620,000 loans, respectively,” he said.
“The weighted average coupon on SME Loan Fund’s portfolio at 31 August was 9.0 per cent through exposure to 243 loans with a weighted average maturity of 2.36 years. The fund pays a monthly dividend at a current rate of 0.6p per month, equivalent to a yield of 7.5 per cent,” he added.
Following a change in ownership structure in the February, the fund’s manager is now Amberton AM and as part of the deal Somerston purchased 15m shares in GLI Alternative Finance or 28.5 per cent of share capital from GLI Finance.
The now manager of the fund Graham Glass, has the ability to invest in loans originated on platforms that do not have a GLI Finance relationship.