P2P GLOBAL Investments’ (P2PGI) recently enlarged investment manager, PSC Eaglewood Europe, has completed a detailed review of the portfolio and presented a transition strategy to the board.
The merger between P2PGI’s investment manager MW Eaglewood and Pollen Street Capital (PSC) completed on 18 September, and Eaglewood’s staff have now moved into PSC’s offices.
The business integration is ongoing and the board said it has increased confidence that the realigned portfolio can achieve target returns of six to eight per cent over the 18-month timeframe that it set out in late May.
‘The manager remains confident in its ability to transition the portfolio into more attractive specialist assets with a greater exposure to sterling denominated assets and to secured assets,’ the board said in a stock exchange update on Monday.
The announcement follows a disappointing period of performance. Following a management review, the decision was taken to lower the portfolio’s exposure to US consumer loans in favour of secured European real estate, consumer and SME loans. It is also hoped that the merger between PSC and MW Eaglewood will ultimately improve performance.
In August, P2PGI grew its net asset value (NAV) by 0.14 per cent. The investment manager said this was lower than it had hoped and put it down to some parts of the portfolio continuing to season.
Between January and 30 September, the fund grew its NAV by 3.1 per cent, which was slightly below 3.3 per cent by the average fund in Numis’s direct lending sector. Over the same period, its share price rose by five per cent, which compares to a gain of 5.7 per cent by the average investment company in the Numis sector.
In line with recommendations made in the management review, P2PGI’s allocation to US loans has fallen by 10.6 per cent since the end of February, totalling 35.4 per cent at the end of August. The fund’s European real estate loan allocation has also increased by 5.8 per cent since February to 13.6 per cent, while UK SME exposure grew by 4.1 per cent. The portfolio had close to 190,000 active loans at the end of August.
“The majority of the assets are performing in line with the investment manager’s targets. As in previous months, the investment manager continues to increase exposure to lending sectors where attractive risk-adjusted returns may be achieved,” PSC Eaglewood Europe explained in an update.
Over the three years to the end of September, the fund’s NAV has risen by 16.5 per cent. However, share price performance over the same period has been disappointing, down 12.2 per ccent. P2PGI currently trades on an 18.5 per cent discount to NAV.
Numis analyst Ewan Lovett-Turner suggests this discount offers some value, but expects it will take time before it narrows substantially.
“We do not expect the discount to narrow significantly until there is greater clarity on the shape of the ongoing portfolio and it starts to deliver more consistent NAV performance,” he added.