By Daniel Lanyon on 30th July 2018
Last week’s collapse of an invoice finance platform, part owned by the fund, has meant investors have seen a fall in its net asset value.
The £742m P2P Global Investments trust saw a fall in its net asset value (NAV) of 0.14 per cent in June, according to a stock market update that showed its written off stake in Urica wiped out any income gains during the month.
Urica, an invoice finance platform, collapsed two weeks ago following a fraud among its clients and an unwillingness among shareholders to recapitalise the business.
“The result for the month is disappointing and has been significantly impacted by the previously announced write down of the £5.5m URICA Limited equity position following the business being placed into provisional liquidation on 20th July 2018,” the fund said in a stock market update.
P2P GI, in addition to having an equity investment in URICA, was providing a revolving credit facility to the platform but as it is to a separate entity - URICA Europe Limited - and its outstanding exposure - £24.4m - is insured the fund said this was not going to impact the NAV further.
Excluding the one off write down of URICA equity, the P2P GI’s returns on an annualised basis were 6.38 per cent of NAV growth including share buybacks and 5.30 per cent annualised excluding buybacks.
“This is still below the 6 per cent target (excluding buybacks) set out in the strategy update in November, however, strong progress has been made in transitioning the portfolio to more attractive asset classes and reducing the exposure to the low yielding and volatile legacy assets,” the fund also stated in the stock market update.
“The adverse performance versus expectations has been driven by lower returns on the legacy assets with UK consumer driving the majority of the variance.”
Speaking of the legacy portfolio, at the end of June 70 per cent of the portfolio was in continuing assets up from 52 per cent at the end of 2017.
P2P GI says this aspect of the portfolio is delivering 9.2 per cent net yield which is ahead of target.
Source: Pollen Street Capital
P2P GI’s legacy portfolio is being run off and has now reduced from 48 per cent in December 2017 to 30 per cent in June 2018. The fund says the returns in this part of the portfolio have been lower than expected driven predominately by UK Consumer and the overall net yield is significantly below hurdle.
“The continuing portfolio consists of SME loans 42 per cent, Real estate 45 per cent, and Consumer 13 per cent. The majority of the Consumer loan exposure is made up of structured loans where the originator has first loss equity ahead of our exposure and consists of UK, European, US and Australasian exposure,” it said.
“The overall drag on the Company’s profitability, whilst still material, is reducing month on month and the Manager continues to optimise performance through improving servicing and tactically disposing of loans where possible,” it added