Alternative credit investment trust Honeycomb seeks £50m fundraise

By Daniel Lanyon on Monday 12 December 2016

Alternative Lending

The direct lending portfolio is looking to raise more cash from investors one year on from its launch.

The £150m Honeycomb investment trust is seeking to raise up to £50m at a price of £10.15 per share, representing a 2.0 per cent premium to net asset value [NAV]. The placing is expected to close on 12 December, with the new shares due to start trading on 16 December.

Honeycomb launched in December 2015 after raising £100m and raised a further £50m in May. In addition, the fund took out a £37.5m debt facility in June - 24.6 per cent of net assets.

Its most recent factsheet noted that the outlook for deploying the remainder of the facility in the short-term was strong.

The specialist lending fund, whose initial investment objective is to provide shareholders with an attractive level of dividend income targeted at 8 per cent per annum, as well as some capital growth, buys loans made to consumers and small business as well as other counterparties.

The fund’s target income per year has risen to 10 per cent or greater on the issue price from Q3 2016 after the portfolio was substantially deployed. The last quarterly dividend of 23.13p represents an annualised yield of 9.1 per cent.

Major shareholders include the likes of Invesco Perpetual’s Mark Barnett as well as Old Mutual Global Investors, who owned 46 per cent and 29 per cent, respectively, of the share capital at launch.

The fund has a management fee of 1 per cent as well as charging a performance fee of 10 per cent, subject to 5 per cent preferred return hurdle and high watermark.

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