Share buybacks continue at P2P Global Investments trust, nears 2 per cent of issuance

By Daniel Lanyon on Tuesday 13 December 2016

Alternative Lending

The P2P and marketplace lending fund is aiming to narrow its 25 per cent discount at current low valuations. 

The largest closed-ended portfolio offering exposure to the P2P/marketplace lending space P2P Global Investments has entered into another round of share buy-backs in the past three weeks, according to regulatory filings.

In the past two months, the fund has engaged in share buybacks on 14 separate days, with tranches of buybacks ranging from 3,400 to 50,000 in a single day, the latter has occurred on four separate occasions.

The portfolio, like several of its sector peers such VPC Speciality Lending, has seen a bearish widening of its discount to net asset value [NAV], this year despite mostly consecutive monthly gains in its NAV, in comparison to its first few months back in 2014, where the investment trust was on a double-digit premium. Several factors have prompted its share price to fall. The discount is today 25.3 per cent.

Sellers have been concerned of cash drag from currency hedging as well as the level of defaults, amid the market volatility and uncertainty post Brexit, analysts at Numis Securities.

“Returns have been hit by the cost involved in putting in place debt facilities that were not fully utilised; Lending Club increasing rates, which reduced the value of existing loans; holding large cash balances against potential losses from currency hedges; and the life cycle of delinquencies,” they said recently. 

Gearing is now 90 per cent, versus a target of 100 per cent, and cash levels are relatively modest at 4.8 per cent of the portfolio. In September, the fund securitised a pool of Zopa loans which is expected to reduce the cost of debt.

The total amount of share capital held in treasury by the £841m fund has now reached 1.8 per cent of total issuance

The fund initiated share buybacks back in June after calls from some institutional investors. It subsequently completed several more rounds of buybacks, including 250,000 in just one day in July, in two more periods in the summer.  It now holds a total 1,567,604 Ordinary Shares out of a total 86,306,803 Ordinary Shares.

According to AltFi Data, the trust has outperformed the broader UK marketplace lending space, as measured by the Liberum AltFi Returns index (the LARI) since its launch back in 2014.

Performance of P2P GI's NAV since launch vs LARI

Source: AltFi Data

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