AT ITS annual shareholder meeting on 19 June, Ranger Direct Lending (RDL) began the process of winding down its alternative lending fund, just three years after it was launched on the London Stock Exchange.
The previous day, three of the fund’s four board members – including chairman Christopher Waldron – had stepped down, after months of shareholder spats, public statements, and declining values.
But what really happened behind the scenes? And does this signal the beginning of the end for alternative finance investment funds?
It would be easy to blame RDL’s woes on the costly, drawn-out legal battle with the Princeton Alternative Income Fund. Ongoing legal battles with the defunct fund have had a notable impact on RDL’s net asset value (NAV), with the investment manager using the fund’s monthly factsheet to show what the NAV would have been without the Princeton exposure.
However, according to analysts and shareholders, the Princeton issue was merely symbolic of greater problems within the RDL fund.
In March, analysts at Numis warned that “we have been wary of the fund, believing that it was invested in platforms with a higher risk profile than its peers”. Numis added that the fund’s exposure to Princeton highlighted “significant questions over the manager’s due diligence”.
When the RDL board nominated Ares as the fund’s new investment manager, there were rumblings among shareholders about a lack of transparency in the nomination process. Then, major shareholders Oaktree Capital Management and LIM Advisors went public with their views that the fund should be wound down.
However, in a series of calls with RDL investors, Peer2Peer Finance News has found that there was one shared concern that did not make it into the public letters and investor notes. Put simply, the fund lacked the capacity to scale up. is is an issue that will resonate with investors in other alternative lending funds, in the aftermath of the RDL wind-down.
Perhaps the alternative lending market is simply too small to support more than a handful of investment funds.
Or maybe one bad investment is all it takes to lose the trust of your shareholders.
This article featured in the July edition of Peer2Peer Finance News, now available to read online.