Activist investor increases stake in Ranger Direct Lending fund

By Daniel Lanyon on Monday 17 July 2017

Alternative Lending

The closed-ended fund has had a testing 2017 so far due to a platform collapse related to its largest holding.

The closed-ended fund has had a testing 2017 so far due to a platform collapse related to its largest holding. 

The LIM Asia Special Situations Master Fund has increased its stake in the £243m Ranger Direct Lending fund, following the portfolio's move to a double-digit discount. 

The Hong-Kong based fund had already invested in the closed-ended portfolio, which invests in a host of online lending platforms, owning less than 4 per cent. Last week it increased its holding to 5.48 per cent (on the 7th July).

Ranger Direct Lending has seen its share price and Net Asset Value hit in 2017, shown in the graph below, due to 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. 

Ranger Direct Lending share price over 1yr

It had strong run in 2016 where the portfolio outperformed nearly all its rivals as well as the broader marketplace, as shown in the graph below.

Launched in May 2015, the investment trust is focused on investing in loans originated by direct lending platforms that are generally secured against assets with a typically low duration of around two years. Its loans are currently originated on 12 direct lending platforms across various categories including secured SME lending, real estate loans, invoice financing, equipment finance and platform collateralised debt.

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