GCP Asset Backed Income fund mulling £100m C share issue

By Daniel Lanyon on Monday 9 January 2017

Alternative Lending

The closed-ended alternative credit portfolio is looking to raise new cash after its latest successful placing of £16m.

The £164m GCP Asset Backed Income is considering a C share issue targeting gross proceeds of £100m, with pre-emption rights for existing investors, according to regulatory filings.

The investment trust, formerly called Project Finance Investments, raised £106m at its initial public offering (IPO) back in October 2015. It invests in a diversified portfolio of capital-intensive projects which have contracted and - hopefully predictable - medium to long term cash flows and/or underlying physical assets. These are usually medium to long-term fixed or floating rate loans, secured against the cash flows and/or physical assets.

The fund raised £44m via C share issue back in May 2016 which was fully invested by October, and also undertook a further £15.6m in an oversubscribed placing in November 2016.

The fund’s investment managers believe there is still an attractive pipeline of investment opportunities in the near term and plenty of demand from investors.

“The new issue is expected to broaden the Company's investor base, improve secondary market liquidity for shareholders, reduce its ongoing charges ratio per ordinary share by providing a larger equity base over which its fixed costs are spread and further diversify its portfolio of investments,” , GCP said in a statement.

“The company is taking legal, tax and financial advice and will make a further announcement in due course,” it added.

The proceeds from November’s placing have now been substantially invested - in a £10.8m senior loan secured against two supported living developments and a high complex care facility (no less than 21-year term), and a £2.7m in a 4-year senior loan secured against a multi-use social infrastructure development in London.

The portfolio is now 35 per cent invested in property, 31 per cent in Energy & Infrastructure, 25 per cent in Social Infrastructure and 9 per cent Asset Finance projects.

It targets an IRR of 7-8 per cent on the issue price, with returns mainly aimed at quarterly dividends rather than capital growth

Sign up for our newsletters

Your daily 7am download of all things alternative finance and fintech.

Fintech and alternative finance headlines with an exclusive Editor's Note each week. Delivered Monday at midday.