Pollen Street fund hit by Zopa writedown

By Daniel Lanyon on Tuesday 7 January 2020

Alternative Lending

The investment trust saw a change to its name in 2019, as well as a near completion of its portfolio-shift away from marketplace loans.

Pollen Street fund hit by Zopa writedown
Image source: Pollen Street Capital

The £1.1bn Pollen Street Secured Lending fund saw a fall in its net asset value (NAV) for the month of November owing to a write-down in its equity stake in Zopa.

Peer-to-peer lender Zopa raised £140m in December allowing it to stay on track for the launch of its long-awaited banking platform. The cash was needed to fulfil regulatory capital requirements, a key requirement for the lifting of restrictions on its bank licence. The new fundraise prompted a fall in its valuation, however, of 47 per cent resulting in a new money valuation of £188m. Zopa only managed to secure the funding the day before the regulators’ deadline.

The decrease in the valuation of the fund’s Zopa stake reduced the investment trust’s NAV by 0.7 per cent. 

Pollen Street Secured Lending's, formerly P2P Global Investments, Zopa position was written down by 63 per cent from £7.8m to £2.9m. The legacy equity portfolio of Pollen Street Secured Lending, is now valued at £27m (3.7 per cent of NAV).

Analysts at the investment bank Liberum said: “The company has again highlighted that the Zopa write down does not impact its ability to pay dividends as it is treated as a capital item.”

“The NAV return in the month after stripping out the Zopa writedown was 0.51 per cent. This is the fourth consecutive month where monthly returns would have been in excess of 0.5 per cent.” 

“The continuing portfolio has delivered consistent underlying income returns in the year. The overall NAV return was impacted by issues relating to the legacy portfolio during the year. The impact of the legacy portfolio and equity positions should decline as the exposure decreases.”

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Companies in this Article:

Liberum
Pollen Street Capital
Zopa