RANGER Direct Lending is looking to raise another £25.9m via a share placing, in an attempt to bring its share price in line with its net asset value (NAV).
The Ranger Direct Lending Fund (RDL) invests primarily in US-based alternative lending platforms but it is listed on the London Stock Exchange and the falling value of the pound has resulted in a disparity between the share price and NAV. At the end of September 2016, the company’s cum-income NAV was $15.58 (£12.01), while the share price was hovering around the £11 mark.
“Our NAV is trading higher than our issue price,” investment manager Bill Kassul told Peer-to-Peer Finance News. “We came out at £10 per share and today we’re at £11.70 so we’re up dramatically but we’re still trading at a discount because we invest mainly in US loans which are dollar denominated. The sterling pound is getting creamed right now against the dollar so our NAV keeps shooting up.
“We’re chasing our NAV even though its way above our issue price.”
The London-listed fund will start by issuing 25 million shares at 103.5p each, but may issue up to 75 million new shares. The company said that there was “substantial available deployment capacity amongst existing and new potential platforms for investments with net returns in line with its risk and return targets”.
Kassul added that the fund had been performing “very well”, attracting a number of ‘buy and hold’ institutional investors from across the UK.
“Our investors have definitely shown a lot of interest in investing in the fund,” he said. “There’s not a lot of liquidity for our shares and a lot of our investors have told us they’d like to buy more shares.”
Ranger issued 30 million shares, priced at 100p each, to raise £30m at the start of August.
“The investors put one covenant in there which said we don’t want you to do over 20 per cent more leverage on your initial fundraising,” said Kassul. “That lowered our top end ceiling from 50 er cent to 37 per cent which was fine because we were doing so well.
“The first offering was very successful – it was oversubscribed. It’s been trading on the market at three or four per cent premium in just the first couple of months.”
Ranger’s half-year results last month showed a net profit of $9.94m (£7.5m) and Kassul told Peer-to-Peer Finance News at the time that the company “definitely has more room to deploy investment capital”.
However, he also added that the portfolio team has been shortening up the length of the loans and taking on more security in anticipation of a market downturn. “I don’t think this will happen in 2017 – the US outlook is pretty stable – but we’re planning for a rainy day,” he said.