What does the future hold for the world’s first P2P lending investment trust?
The world’s first investment trust dedicated solely to peer-to-peer lending is coming up to its sixth anniversary, but a shift in strategy and a fall-out over a possible takeover may leave it with little to celebrate.
Here is the story so far.
P2P Global Investments launched in May 2014 as the first investment trust purely putting money into the P2P sector.
Managed by MW Eaglewood, it backed loans in platforms such as Zopa and Funding Circle in the UK and LendingClub in the US.
The fund has struggled to hit its target annual return of six to eight per cent per year and has persistently traded at high discounts.
There have been plenty of attempts to inject new life into the investment trust.
First, its manager tried shifting away from US consumer loans in September 2016, but this didn’t satisfy the board, which announced in April 2017 that it was reviewing its management arrangements.
This resulted in Pollen Street Capital taking a controlling stake in MW Eaglewood the following month.
A strategic review followed in November 2017 where P2PGI said it would continue repositioning to specialist and secured assets.
It also stopped funding Zopa and Funding Circle loans in 2018.
Read more: P2PGI returns improve as it continues shift away from P2P assets
Despite this, the investment trust has still struggled for consistent performance.
It has had the odd month of decent net asset value (NAV) returns but has also reported some poor months that have in the past been blamed on its legacy Zopa and Funding Circle portfolios.
The name of the fund was changed in September 2019 to Pollen Street Secured Lending (PSSL).
This may reflect a different focus but the board scrutiny has continued.
A December 2019 factsheet released in January included a recommendation from the investment manager, Pollen Street Capital, to raise the quarterly dividend from 12p to 15p for the final three months of the year.
This would suggest that performance is improving.
However, the board later released a statement clarifying that no decision had been made.
That brings us to the latest clash, with Waterfall Asset Management expressing an interest in acquiring the fund.
The board is keen but has accused Pollen Street Capital of failing to provide relevant paperwork needed and has given it 12 months’ notice to terminate the management agreement.
Pollen Street Capital has denied refusing to provide relevant documentation but has expressed concern about how much Waterfall requires, especially if it doesn’t end up doing a deal.
Waterfall is already a key player in P2P, having backed loans through Funding Circle.
It has to decide whether to make an offer by 24 March 2020.
That could leave PSSL heading into its sixth anniversary in May with the prospect of a new manager and hopefully happier times and better returns for investors.
