(Alliance News) - Alcentra European Floating Rate Income Fund Ltd on Friday said its net asset value per share fell sharply in financial 2020 amid the "turmoil" surrounding the Covid-19 pandemic.
The company's NAV per share as at March 31, the end of its financial year, was 82.68 pence compared to 103.61p the year before.
"The majority of this decline occurred in March 2020 and directly reflected the turmoil in the markets around the world from the impact of coronavirus," Chair Ian Fitzgerald explained.
Alcentra European increased its total dividend per share for the year by 2.9% to 4.59p from 4.46p, maintaining its dividend policy. Post year-end, the firm declared a 1.00p per share dividend.
Nonetheless, the company has faced challenges. It was listed amid a low interest rate environment, with the expectation that rates would increase. This has not happened, and has prevented Alcentra European from attracting investors with management of is discount to NAV becoming a "constant issue".
Buybacks took place with the share capital of the company reduced, but with the capital base contraction came concerns about Alcentra European's ability to provide a diverse enough portfolio and stay cost effective for investors.
In April, Alcentra European proposed changed to its investment objectives and policy that were approved by the Financial Conduct Authority. It was thus proposed that Alcentra European embark on a managed wind-down, realising investments with cash to be returned to investors.
However, this realisation programme ended up taking place during "difficult markets". In light of this, the company's investment managers was of the view that the strengthening market in early June represented "a window of opportunity" after March's lows.
Chair Ian Fizgerald said: "The investment manager instigated a phased realisation programme in May and June 2020 and has sold 100% of the investment portfolio by two competitive auctions known as bids wanted in competition. The final sale completed on June 10 at a result close to the market value of the portfolio and up on the March 31 market value. This will now be followed by the commencement of a process to place the company and its subsidiary into voluntary liquidation."
Shares in Alcentra European were untraded on Friday morning, having last closed at 87.40p.
By Anna Farley; annafarley@alliancenews.com
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