VPC Specialty Lending (VSL) has confirmed that a subsidiary of one of its portfolio holdings has been placed into administration, but reassured investors that this will have “no impact” on their expected returns.
US-based credit company Elevate wound down its UK subsidiary earlier today (29 June), citing a lack of regulatory clarity and complications caused by the Covid-19 pandemic. Elevate offered unsecured consumer loans under the brand name ‘Sunny’. The platform was previously known as ‘1 Month Loan’ and ‘Quid’.
According to a note on Sunny’s website, Ed Boyle and David Pike of KPMG have been appointed as joint administrators, and they “intend to perform an orderly wind down of the business and to recover the assets of the business for the benefit of the creditors.”
Outstanding loan payments are expected to continue, and interest will continue to be charged.
VSL told investors that the subsidiary represented less than five per cent of Elevate’s overall business. As at 31 May 2020, the direct investment exposure of the UK subsidiary of Elevate in VSL represented just 1.2 per cent of the investment fund’s net asset value (NAV).
“The company’s investment is fully secured by Elevate UK assets and benefits from a guarantee from the Elevate US parent company,” said a VSL spokesperson. “We expect no impact on NAV or future performance as a result of this announcement.”
Last month, VSL told investors it was preparing its portfolio for a “severe and sustained recession” in the wake of the pandemic.