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To generate an attractive total return for shareholders consisting of dividend income and capital growth through investments in specialty lending opportunities.
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Dire and no reason for it.
Nothing in RNS so just live with it.
Take your dividends and wait for your capital return.
Whats going on with this fund? The price action is awful
Sorry on ‘merger’ that was POLN but fell just the same
Like the way he unpacks things in a clear and simple manner
Been frustrating watch the SP fall since merger, carrying a 20% paper loss, never understood the fall to be honest which is why I didn’t object to the wind-down
Even with his ‘pessimistic’ estimates there’s nearly a 100% in this…. Just having the patience to let it unfold and hope nothing goes amiss
At sub 70p this yields over 11.5% p.a. for the next year or so. Over 25% discount to NAV. NAV stable YTD and historically showed good growth. Reasons to think book value isn’t realisable value. On top, Capital returns begin next year and by 2025 well over half should have been returned.
Gla
I am averaged in at 74p a share. should I be buying more?
I’m going to miss these lovely regular dividend payments if they do wind this up. 😕
Hi SD, I've dipped my toe in, thanks for the advice.
LBOW announced special dividend of 7.4p capital return.
New NAV 50.74p per share. Share price buy 31p
Agricrore PS have a look at LBOW.
Property Debt sector
39% discount
10% dividend.
In wind-down. Loans on property. All first charges. Average loan to value 69%.
I emphasis Average.
All loans are now owing. Sales are going slowly but all are paying their interest.
Excellent bit of research there agricore.
I agree with you entirely on valuations of fintechs. It will be along time before it is fully wound up.
I find it difficult to believe that by next year we wont be in a normalised market. Hence better valuations.
Also the interest charged by VSL has risen from 10.5% to 13.8% with no increase in the dividends.
I assume that will change.
Thanks Agricore, I've not been through a wind-up similar to this before. It certainly looks quite compelling, if I had funds available I might be adding.
Krusty, if this were a majority unlisted equity portfolio, yes that could be a factor. But since it's majority debt and because the net inflows of that debt are on a relatively rapid timescale I expect there will be some bulk offload towards the end - hence the 40%-100% range of outcomes based on that. I held Urban Exposure a few years back (a ST tip) and that was quite similar. About 9 months prior to the final payout they took it unlisted and 1 day my account was credited with my share of the proceeds. It was an easy 23% gain based on the realisable price of assets vs market price.
I do0n't have a problem with the estimated inflows, I just think there are likely to be significant additional costs associated with liquidating the assets, temporary staffing costs, redundancies, legal costs etc. that have yet to be factored in and may have a significant impact on the funds attributable to shareholders. I guess we won't really know until we start to get some visibility of payments to shareholders. It's not going to be easy to keep track of going forward, but at least your numbers suggest that shareholders should come out of this with more than the 71.2p currently on offer. I'll be holding on that basis.
Krusty, they are net inflows so I’d taken that to be net of costs, but I’ve not validated that. Have you been able to validate those flows?
You don't seem to be factoring any costs into your estimates Agricore?
SD,
This link gives some further clarity on the timelines - see Page 2 and 3 particularly:
https://vpcspecialtylending.com/wp-content/uploads/2023/07/VSL-Monthly-Report-May-1.pdf
"Approximately 64% of the Company’s asset-backed lending investments, by value, fall due for repayment by the end of 2024, with the remaining 36% due for repayment by the end of 2027."
Comparing this statement to Page 3 the net inflows at first it struck me these don't tally. I see a large chunk fall due in 2025 approximately equal to that due in 2024?! Approx: 2024 £80m/ 2025 £80m/ 2026 £10m. So ~£170m of the £277m based on the 2022 balance sheet numbers bearing in mind Jan-May NAV is cumulatively -0.19% (i.e. about the same). The chart does say "Profile of Contractual Maturities less Projected Borrowing Paydowns" so of course this relates to loans, not equity/prefs/warrants. Adding equity on the balance sheet and £80m of 2024 loans gets me to 67.5% - so that appears to reconcile.
So:
1. VPC think they can liquidate most of equity and about 45% of debt in 2024. 64% of NAV is £177m which is also 87% of the current share price. That's 63.7p per share.
2. VPC then think something like 28% falls due in 2025. That's 28.7p per share.
3. Leaving something like 3.6p a share in 2026 and H1 2027.
4. By my reckoning if you factor in quarterly 2p dividends which we know will happen for "a year or more", us shareholders can expect a cash break even in either Q3 of 2024 or Q4 2024, where there's then a 40% (28.7p) upside coming the year after. With a 5% upside in 2026/2027. Worst case was a loss of 5% so worst case is 40% upside.
5. But I would repeat my earlier optimism that the NAV growth could surprise to the upside making the upside larger than 45%. This year's US magnificent 7, the excitement around AI, the Fed's likely position that rate hikes have finished, and VSL's solid 4 year growth in NAV (2018 - Nov 2022) are all evidence that there's potential for further upside. So my
best estimate is this will end somewhere between a 40%-100% upside, where break even is just over a year away for investors based on today's share price of 73p.
If the rise holds at least that’s the divi covered
So how is the wind down going to be achieved? Do we get lots of special dividends? So far it seems the nav had dropped and along with it the sp with nothing communicated.
Very odd trades today all very small
So that's a yield of over 11% if you buy today.
"Based on existing market conditions, potential cash flows and on the assumption of continued strong portfolio performance, the Board currently expects to continue paying dividends at the current rate for at least a year and potentially longer. The Company intends to maintain its investment trust status during this managed realisation process prior to liquidation."
Encouraging.
Divi policy was passed so assuming no change (unless I’ve missed something), are we not overdue an announcement?
Just checked up 1% on Augmentum.
That is I will hold onto VSL for at least a year....and enjoy the dividends.