P2PGI diversifies to boost disappointing net asset value
PEER-TO-PEER Global Investments (P2PGI) is diversifying its investments in an effort to increase its net asset value (NAV), which fell even further away from the fund’s target last month.
The London-listed investment trust reported a monthly NAV return of just 0.23 per cent for September, which almost halved from 0.43 per cent the previous month. This places the 12-month rolling NAV at 4.74 per cent, which is well below the firm’s target of six to eight per cent per annum.
“We are continuing to target six to eight per cent NAV but its taking a bit longer to hit that than expected,” a company spokesperson told Peer-to-Peer Finance News. “There are two reasons for that: the first is that there were a lot of issues around Lending Club earlier this year and the second is forex volatility.”
P2PGI has previously said that it intends to diversify its portfolio in terms of geographical focus and asset classes in an effort to increase its NAV. Between June 2016 and September 2016 its cash and money market holdings have been reduced dramatically and it is believed that the company has already begun to increase its exposure to new markets in Europe, as well as asset classes such as real estate and receivables.
“The report alludes to an increase in monthly impairment levels as the overall portfolio has seasoned, albeit with impairments remaining, on the whole, within the manager’s original expectations,” said Matthew Hose, an equity analyst with Jeffries. “While this seasoning is to be expected, we feel the key question is at what point do the loss curves stabilise, particularly given news of deteriorating loan performance on certain platforms.
“We are also cognisant of the impact of prepayments, which can serve to lower the quality of the loan book. Elsewhere, the report highlights a reduced cash balance of around seven per cent (including bonds), having fallen from 21 per cent at the start of the quarter. Helpfully, there is no apparent influx of cash stemming from the recent Zopa securitisation, while the associated benefit of the reduction in funding costs on the Zopa loan portfolio, from 300-400bps to a weighted average cost of Libor plus 169bps, should be felt over the coming months.”
Earlier today, the firm also released a dividend of 11p per share which is due to be paid on the delayed date of 25 November 2016. This represents a four per cent return for investors.
P2PGI’s total market capitalisation now stands at £716,614,735, with a share price of 840p.