The closed-ended fund started the year with an upset to its portfolio following a platform collapse relating to its largest holding.
Investors in the £250m Ranger Direct Lending investment trust have had a bumpy 2017 after a stellar run in 2016 where the portfolio outperformed nearly all its rivals as well as the broader marketplace, as shown in the graph below.
Source: AltFi Data
Its difficulties in 2017 emanate from the collapse of a direct lending platform in the US called Argon Credit that it has $28m of indirect exposure to through the Princeton Alternative Income fund (who lent money to the platform).
The fund was the largest holding in the investment trust. At the time Ranger said there would not necessarily be a hit to its net asset value although it has more recently said it could knock about 4 per cent off the NAV. Now, six months on the issue does not seem to have yet neared a resolution. The company out this statement this morning:
“The Company's outstanding redemption request with Princeton, the Company has not yet reached agreement with Princeton with respect to a redemption plan. The Company will continue to seek resolution and reserves all rights and courses of action available to it in connection with its investment in Princeton.”
The Argon Credit situation has prompted the trust’s move to a pretty hefty discount of 24.5 per cent compared to its NAV, however, the investment manager will attempt to mitigate this by using part of its management fee to buy back its shares, it also announced today.
“Ranger Alternative Management II LLP (the "Investment Manager") that it intends to utilise part of its management fee to acquire ordinary shares in the market in order to demonstrate its confidence in the Company's investment strategy. Further announcements, as required by applicable regulation in respect of such purchases, will be made in due course,” it said in the statement.
Ranger has also agreed several other procedures to implement to lure back investors and close the discount. Firstly, as existing investments mature over the next two years, it will reduce the percentage of the portfolio that to unsecured (directly or indirectly) by assets and/or personal guarantees with a target that this portfolio of the portfolio is no greater than 15 per cent of gross assets.
Secondly, as existing investments mature over the next 18 months it will ensure assets originated through or issued by any single platform does not exceed 15 per cent of the portfolio.