Legacy portfolio weighs on P2PGI gains
P2P GLOBAL Investments (P2PGI) saw its gains pushed down by its exposure to defunct supply chain platform Urica over the third quarter of 2018.
The alternative finance-focused investment trust revealed its net asset value (NAV) return was 0.44 per cent in September, down from 0.5 per cent in August, which put its quarterly performance at 1.46 per cent.
During the quarter, P2PGI was boosted by a Funding Circle securitisation and an increase in the valuation of the equity holdings including Zopa, following its successful £44m fundraising. However, the investment trust’s performance lagged after it had to make further provisions to support a credit facility that had been provided to Urica.
P2PGI wrote off an equity investment worth around £5.5m in Urica in July after the firm put itself into liquidation following a fraud attack in France earlier in the year.
Meanwhile, P2PGI said it continues to make “strong progress” in transitioning the portfolio towards specialist lending assets, and completed two new structured facilities in the quarter with new partners.
The proportion of legacy assets that the fund is moving away from– such as US consumer loans – is now at 25 per cent, from 48 per cent at the end of 2017.
Read more: Share buybacks help boost P2PGI NAV
But Numis suggested this process has taken longer than expected.
“Progress continues to be made, reflecting in the legacy assets being reduced from 48 per cent at 31 December 2017 to 25 per cent at 30 September,” a Numis analyst note said.
“Performance has been weaker than expected from the legacy portfolio, and therefore the fund has not achieved its target of covering a 15p dividend by the end of the second quarter of 2018.
“We continue to believe that P2PGI offers attractive value trading on an 19 per cent discount, and that there is potential for it to rerate as performance improves.
“[P2PGI’s investment manager] Pollen Street expect improved performance in the rest of 2018, as the continuing portfolio starts to dominate the portfolio, although continued volatility from the legacy portfolio cannot be ruled out.”