POLLEN Street Secured Lending’s (PSSL) net asset value (NAV) will be reduced by 0.7 per cent as a result of the downward valuation of Zopa.
The investment trust, which holds equity in the peer-to-peer lender as part of its legacy portfolio, said this will not stop its ability to pay dividends.
Zopa announced earlier this week that it had secured a £140m investment from IAG Silverstripe, which allows the company to meet the capital requirements necessary to gain full authorisation as a bank.
As a result, PSSL has written down the value of its legacy position in Zopa by 63 per cent to £2.9m, bringing the legacy equity portfolio to £27m or 3.7 per cent of NAV.
“The manager continues to look to realise these equity positions where possible and has successfully sold two positions this year totalling £12.1m of NAV,” PSSL said in a stock market update.
“This mark down does not impact the company’s ability to pay dividends as it is treated as a capital account item under the accounting standards and therefore does not impact revenue reserves.”
Analysts noted that this comes just as PSSL had seen an improvement in performance.
“After a few months of strong performance, PSSL’s NAV will be hit by the valuation of one of their legacy equity positions,” Numis said.
“Exposure to this part of the portfolio is now relatively modest at 3.7 per cent of NAV, but further volatility in these holdings cannot be ruled out.
“The manager has systematically tried to minimise this exposure in recent years.
“We estimate a NAV per share of 954.4p (including the dividend and the Zopa write down), putting the shares on a discount of 13.7 per cent.”