Funding Circle’s investment trust has ruled out selling the majority of its loans as part of its wind-down.
The SME Credit Realisation fund – previously set up to back loans on the Funding Circle peer-to-peer lending platform – is in the process of being closed and was investigating whether to sell off its portfolio of loans.
However, its board has said in a stock market update that this strategy is not in the interests of shareholders.
“Having received a high level of interest from potential buyers, and after detailed consideration of the commercial terms indicated by those parties, the board has concluded that it will continue to pursue a potential sale of a small portion of its assets, but that it will not be in the interests of shareholders to dispose of the portfolios comprising the majority of the company’s assets to such parties at this time,” it said.
“The board will continue to appraise opportunities in the future to realise investments in accordance with its investment objective, which may comprise opportunistic portfolio sales.”
This means the fund will instead wait for loans to mature and continue repaying investors.
Analysts at brokerage Numis said they expect the investment trust to still sell a small portion of assets.
“Some shareholders will have been hoping for a swift portfolio sale and return of capital, but the board was clearly focused on achieving value for shareholders and not accepting a portfolio at any price,” a research note said.
“The board is still pursuing a potential sale of a small portion of assets, which we expect represents one of the regional portfolios, with 13 per cent of assets in continental Europe and 13 per cent in the US at 31 December.”
The fund launched in 2015 but announced it was due to close in April after being hit by hedging fees and the impact of International Financial Reporting Standards (IFRS) requirements.
It is currently trading at a discount to net asset value of 12 per cent.