Alternative credit investment trust the SME Loan fund is looking to substantially increase its size in a bid to increase liquidity and improve its competitive positon following a shift in management and investment strategy.
The new manager, SQN Capital Management, was appointed to the £52m SME Loan portfolio last month. It is an independent asset manager that specialises in alternative credit and currently has just over US$1bn of assets under management, including the London-listed £596m SQN Asset Finance Income Fund.
The SME Loan investment trust’s board has now decided to change the name from The SME Loan Fund to SQN Secured Income Fund with effect from 28 April 2017 to reflect the appointment of the new managers and the changes to its investment strategy. Its new ticker is to be changed to SSIF with effect from 2 May 2017.
The closed ended SME Loan Fund will issue up to 250 million new shares, increasing the size of the company in order to increase the liquidity of its shares in the secondary market, subject to a shareholder vote.
It had a secondary placing of Ordinary Shares (representing 48 per cent. of the Company's issued share capital) previously held by GLI Finance Limited principally with new investors (both institutional and wealth managers) in March 2017 has broadened the shareholder base significantly.
This, the firm says, has already led to a material improvement in the market liquidity of the shares and a narrowing of its discount net asset value [NAV].
“The Directors believe that the Company's prospects for issuing further Shares in due course have been enhanced significantly by that secondary placing and the appointment of the New Managers and will be further enhanced if Shareholders approve the proposed changes to the investment objective and investment policy and the adoption of the New Articles,” the firm said in a statement.
If approved, the share Issuance may be implemented by way of a series of placings and tap issues and, potentially, open offers, offers for subscription and/or intermediaries offers. A new agreement – subject to a shareholder vote – also allows provision for a continuation resolution if the Company's net assets at 31 December 2019 are less than £250 million.
Until recently the fund invests in a range of SME loans originated principally through Investee Platforms (being loan origination platforms and finance companies in which GLI Finance has an equity interest).
New York based SQN’s appointment last month revised the fund’s investment objectives and investment policy will not include any obligations to invest through Investee Platforms and a new focus to invest in a range of secured loan assets mainly through wholesale secured lending opportunities, secured trade and receivable finance and other collateralised lending opportunities.
Under the current investment policy, the Company's portfolio is weighted towards the UK. The revised investment policy envisages that the portfolio will be weighted towards the UK, Continental Europe and North America.