The board of the Victory Park Capital Specialty Lending (VSL) investment trust has promised shareholders an option to vote on the closure of the fund next year, if they are still unhappy with its performance.
It forms part of changes to a continuation vote on the fund maintaining its operations, which the board wants shareholders to back at its annual general meeting (AGM) on 24 June.
The board had initially proposed that shareholders can have an exit opportunity for up to 100 per cent of the shares in issue immediately following the meeting in 2023 if the net asset value (NAV) for the three-year period is less than 18 per cent.
It is also offering an exit opportunity for up to 25 per cent of the shares in issue immediately following the company’s 2023 meeting if the average discount to NAV at which the shares trade over the four-week period ending on 31 March 2023 is greater than 15 per cent.
However, shareholders such as Staude Capital have questioned the ambition of the board and said more must be done to address the alternative finance-focused fund’s large discount.
As a result, the board has announced today (10 June) that if a continuation vote is approved, shareholders can hold a new vote at next year’s meeting if the NAV return is less than four per cent for the period to 31 March 2021.
Shareholders will also get a full exit following the 2023 AGM if VSL’s NAV returns are less than 24 per cent in the three years to 31 March 2023.
They can also get an exit of 25 per cent of their share capital if the average discount for the three month period ending 31 March 2023 is greater than five per cent.
Analysts at brokerage Numis said the amendments provide higher performance thresholds on the exits but highlighted that they are still below the fund’s initial public offering target of 10 per cent per year.
“Discount controls can be more effective when investors are offered greater certainty of an exit and we believe the measures put in place by the board are useful additions for investors, giving the potential for a future exit if performance disappoints,” Numis said.
“In addition, in the near-term, VSL has been regularly buying back shares, and should have firepower to continue these as cash is being generated from prepayments from the portfolio.
“We believe Victory Park is an experienced management group that appear to have been proactive in managing the portfolio in the current difficult conditions.
“However, it is likely to be difficult to stimulate fresh demand for the fund, and further narrow the discount, until investors have more clarity on how performance is being impacted in current market conditions.”