The VPC Specialty Lending (VSL) investment trust has hinted at a refresh of its board following opposition to two key appointments at its annual shareholder meeting earlier this year.
The alternative finance-focused fund secured backing to continue operating in a continuation vote in June but there was a “significant minority” of investors who opposed the reappointment of its chair Kevin Ingram and director Richard Levy.
A half-year update from VSL today (29 September) revealed it is hoping to make an announcement on board changes by the end of October.
“At the annual general meeting there was also a significant minority vote against my reappointment and that of Richard Levy,” Ingram said.
“Accordingly, the board decided to undertake a shareholder consultation process and also to recruit a new independent director to replace Richard Levy.
“The board is seeking a director with financial acumen who is well seasoned in the investment trust market and has the standing, mindset, and knowledge to be independent and capable of challenge.
“The board will also be seeking a candidate to lead the audit and valuation committee in due course.”
Ingram said VSL has been consulting with major shareholders since the annual meeting.
“During this process, a wide range of constructive suggestions have been made and the board is actively considering these with a view to taking appropriate action,” he said.
“We hope to make an announcement on both the shareholder consultation and on board refreshment and succession by the end of October.”
Shareholders have previously expressed concerns about the conditions for allowing the fund to continue but the board promised an option to vote on the closure of the fund next year if they are still unhappy with its performance.
The half-year results showed VSL posted a net asset value (NAV) total return of 0.48 per cent for the period and said it continues to see “positive momentum” from its balance sheet investments amid the “exceptional economic, societal and market turbulence” caused by the pandemic.
Ingram said the uncertainty in the economy over the next 12 to 24 months is “possibly higher than at any point in our lifetimes, as the Covid-19 pandemic continues to impact economic, societal and health environments on a global scale.”
He said the fund is focusing on addressing its large discount to NAV and is regularly monitoring its investment portfolio.
He added that the fund is also seeing increased opportunities for platforms providing buy-now pay-later credit.
“We have focused our recent pipeline efforts on executing additional transactions in this sector as it meets all our desired credit expectations and there is a clear need for credit from prospective portfolio companies,” he said.
“We continue to look for and identify other trends that can create either risk in our existing portfolio or create opportunities for investments in the future.
“In our opinion the dramatic efforts taken by governments and central banks globally has created a relative air pocket in economies around the world, and certainly so in the US.
“Eventually this government support and stimulus will taper off, and what happens after that is unclear but seems likely to ensure a volatile future over the medium term. We will continue to cautiously deploy capital and at this point we believe the portfolio is well positioned to withstand future changes to come this year and next.”
VSL is currently trading at a discount to NAV of 29 per cent, which analysts at brokerage Numis said still “offers value given that much of the portfolio is via structured facilities with some first-loss protection and payments have continued to be received in-line with expectations.”