VICTORY Park Capital Specialty Lending (VPC) saw its net asset value (NAV) soar to 1.03 per cent in April, breaking the one per cent barrier for the first time since September 2018.
This was despite an end-of-month exit by famed fund manager Neil Woodford, who sold his 16.6 per cent share in VPC in an effort to solve his own liquidity issues.
However, VPC’s monthly report for April did not reflect this disruption, increasing both its NAV (cum income) and income return, which rose from 0.72 per cent in March, to 0.91 per cent in April.
The fund’s performance was credited to a low cost, non-recourse gearing facility for VPC’s Elevate Elastic balance sheet investment.
“That facility closed on 30 April 2019 and created a temporary increase in the cash held by the company,” said the fund’s manager in its monthly report. “The proceeds from this facility were reinvested into other balance sheet investments in early May.
“This facility has reduced the net exposure of the company’s investment in Elevate by 6.34 per cent to 16.51 per cent of NAV.”
VPC also added a new balance sheet investment to its books in April – New York’s Counsel Financial Holdings, a specialty non-bank commercial lender that originates and services senior secured loans to law firms.
This new investment continues VPC’s plan to move away from marketplace lending and towards balance sheet investments in an effort to boost returns. This strategy appears to be paying off, as balance sheet investments contributed 1.08 per cent towards April’s NAV, while marketplace loans returned just 0.4 per cent.
By the end of April, VPC recorded NAV growth of 2.80 per cent in the year to date, and 19.54 per cent since its inception in March 2015.
Market capitalisation was £242.9m – down from £253m the previous month – and it was trading at a 22.02 per cent discount to NAV.
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