RANGER Direct Lending (RDL) is recommending alternative asset manager Ares to take over the fund’s management, who plans to shift its focus towards asset-backed loans.
The alternative finance-focused fund said that it is giving 12 months’ notice to the current investment manager, Ranger Alternative Management II.
Shareholders accounting for over 39 per cent of the company’s share capital have already backed the appointment of Ares, RDL said, and the board is now conducting a wider shareholder consultation process.
RDL announced in January that its investment arrangements were under review in an attempt to boost performance.
It has been hit by ongoing legal proceedings with its Princeton holding and lacklustre returns within its portfolio as well as an ever-widening discount to net asset value (NAV).
RDL said in a stock market update on Tuesday morning that 20 investment management firms had submitted proposals and six met with the board. Ares will be recommended as the new manager.
Ares has proposed investing primarily in asset-backed loans that it will source and structure itself through a special purpose entity in order to achieve legal and economic separation from the credit risk of where it was originated.
The portfolio – which currently has a mix of business, consumer and property loans – will continue to have a majority of its assets in US- denominated and US based loans, but there will also be some exposure to Canadian and Eurozone loans, the announcement said.
Ares is already underwriting asset-backed loan transactions on behalf of a number of large institutional clients and it is expected that RDL will invest alongside these to give it access to larger transactions.
Keith Ashton and Jeffrey Kramer, each a partner and co-head of structured credit for Ares, will serve as the designated portfolio managers for RDL.
Ares’ appointment is also subject to the asset manager’s own due diligence and a general meeting will be called for shareholders to vote on the decision.