Honeycomb’s failed merger with the Pollen Street Secured Lending (PSSL) investment trust cost the fund almost £600,000, its latest accounts show.
The alternative finance-focused fund had tried to seal a merger with PSSL last year as both were run by the same investment manager, Pollen Street Capital.
But the PSSL board rejected its advances and PSSL was subsequently acquired by Waterfall Asset Management.
Honeycomb’s 2020 accounts show the potential merger cost the fund £585,000.
These expenses, as well as other costs such as joining the FTSE All Share Index, pushed the investment company’s profits down to £20.7m in 2020, compared with £31.2m in 2019.
The accounts also show that Honeycomb’s directors will receive an additional £15,000 to reflect the “additional time to review associated documents and to attend additional meetings” in relation to the potential PSSL merger during the year.
The report still needs to be approved by shareholders at the investment trust’s annual general meeting on 8 June.
The alternative lending trust confirmed that it had maintained a steady net asset value (NAV) in 2020, despite an “exceptional” year.
For the 12 months ending 31 December 2020, it delivered a NAV return of 7.7 per cent.
The company also met its annualised dividend target of eight per cent.
Honeycomb’s chairman Robert Sharpe said that the stability of returns was “particularly pleasing given the economic backdrop.”
“2020 has been an exceptional year,” added Sharpe. “The coronavirus pandemic continuing to have far-reaching effects on society and the economy with governments around the world providing unprecedented levels of support.
“Despite this hugely challenging environment, the group has performed very well throughout the year. This performance affirms our confidence in the resilience of the investment strategy.”