Pollen Street Secured Lending (PSSL) has blamed poor-performing Funding Circle loans in its portfolio and costs related to a potential offer from Waterfall Asset Management for a second consecutive month of low returns.
The alternative finance-focused investment trust posted a 0.09 per cent net asset value (NAV) return in April. This was up from 0.04 per cent in March, but significantly lower than February’s 0.43 per cent NAV.
PSSL said the past two months have been a period of “intense activity” as it protects its portfolio from the impact of the coronavirus pandemic and focuses on cash collection rather than new investments.
Its monthly update revealed it has taken a £2m provision for loans originated by Funding Circle to cover expected losses.
“This does not reflect actual losses at this stage but arises from a relatively high incidence of forbearance in this portfolio,” PSSL said.
“The comparatively poor performance of this portfolio has been noted in previous newsletters.”
The Funding Circle loans represent around four per cent of the total PSSL portfolio and it stopped buying loans in 2018.
PSSL is also awaiting the outcome of a potential offer for the fund from Waterfall Asset Management, which the update said has created £1.3m of costs to date.
The deadline to make an offer was extended for a third time last week to 16 June.
It has already caused a dispute between the board and investment manager Pollen Street Capital (PSC).
The board has given notice to terminate the PSC management agreement, accusing it of withholding due diligence information.