ANALYSTS are predicting the early termination of Ranger Direct Lending’s (RDL) management will reduce costs but have raised questions over the timetable for closure and value that can be gained from the fund’s remaining assets.
In a note to clients, analysts at Numis Securities Research responded to the news that RDL will terminate its investment management agreement with Ranger Alternative Management II on 12 February 2019 – more than two months ahead of schedule.
Furthermore, RDL has announced a special dividend payment of $1.10 (85p) per share, which will be paid to investors on 16 November.
However, Numis has warned that despite these positive developments, there could be more pain for RDL investors further down the line.
According to its most recent portfolio update, RDL’s net asset value (NAV) was up by 0.15 per cent in September, but a further write-down is expected in relation to the fund’s defunct Princeton holdings.
As of 30 September 2018, Princeton’s assets were valued at $28.5m, representing 14.1 per cent of RDL’s of net assets. It is not yet known how much of these funds can be recouped before the closure of the fund.
Read more: Ranger Direct Lending Fund to close
“It is positive that Ranger is distributing cash via a special dividend, following a portfolio sale,” said a Numis analyst. “However, the portfolio update this week highlights that there remains considerable uncertainty over the realisation timetable and value of proceeds from the remaining platforms.
“The fund is currently trading at 729p, representing a 16 per cent discount to NAV of 869.25p (adjusted for the dividend and currency, not including any further write-down to Princeton).
“The early termination of the management agreement may serve to reduce costs, we would expect the nature of future management arrangements to reflect the remaining assets at the time and their scope to be run by the executive directors.”
RDL’s shareholders are set to accept a managed wind-down strategy on 16 November, with the fund formally coming to a close in 2019.