13 Apr 2016 11:00
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13 April 2016
Honeycomb Investment Trust plc ("Honeycomb" or the "Company")
Trading update
Further to the portfolio acquisition announcement of 7 April 2016 (the "April Portfolio Acquisition"), Honeycomb is releasing a trading update.
Based on the investments it has committed to and the currently available pipeline of investment opportunities, Honeycomb expects that the unlevered, net annual returns on loan investments as at full deployment of its IPO equity raise proceeds will be 12% or greater (after expected default losses and servicing costs), which compares favourably to the Company's targeted annual net return on loan investments of 10% or greater.
Since its IPO in late December 2015, the Company has been investing its capital quickly and effectively and is well on track to be fully deployed ahead of the six to nine month period targeted. On completion of the April Portfolio Acquisition, the Company's investment activity will have consisted of:
· Approximately £85 million invested in assets across portfolios and through organic origination partnerships;
· A diversified and seasoned portfolio of over 32,000 loans to UK borrowers;
· Regular origination is now occurring, principally through Freedom Finance at this stage, and a further 3 origination partners are being contracted with. Pay4Later has progressed well and retailer opportunities are being presented. Origination remains on track to increase to greater than £4m per month with a volume mix in line with expectations; and
· The intended investment in Pay4Later disclosed in the Company's IPO prospectus is expected to complete later this month, which will take equity investments up to approximately £4.7 million.
The Company continues to progress discussions and documentation with two major UK banks for the provision of up to £75 million of credit facilities to the Company, with the expectation of concluding the first facility, of approximately £40 million, within the coming weeks.
The Company targets dividends of 8% or greater on its shares issue price when fully invested and levered. Based on the expected net returns on loan investments being currently higher than targeted, the Company expects dividends, once fully invested and levered, will be at a rate of 10% or greater of its shares issue price; expected to be achieved for Q3 period of 2016.
Honeycomb continues to see a strong pipeline of opportunities to deploy funds in line with its returns targets, via the ongoing origination partnerships it has established and others it expects to add going forwards, as well as through further portfolio acquisitions, including the proposed acquisition of the second portfolio referred to in the April Portfolio Acquisition announcement. In light of this, the Company is now actively considering an issue of additional equity, subject to prevailing market conditions and investor demand.
Lindsey McMurray, chief executive of Pollen Street Capital Limited, investment manager of the Company, said: "We are glad to say Honeycomb has been delivering ahead of the plan set out to investors at its IPO. The first dividend is intended to be declared in May, and the prompt deployment of funds means that Honeycomb can move towards providing its shareholders with dividends ahead of its target during this year.
Opportunities continue to be strong in both portfolio acquisitions and organic origination through focusing on delivering high quality lending products in under-served markets"
This announcement is for information purposes only and is not an offer to invest. All investments are subject to risk. Past performance is no guarantee of future returns. Prospective investors are advised to seek expert legal, financial, tax and other professional advice before making any investment decision. The value of investments may fluctuate.
This announcement contains certain statements about the future plans of the Company and expectations relating to its future financial condition, performance, results, strategy and objectives. These forward looking statements are based on the Company's current plans and expectations, and accordingly may be influenced by a number of factors that could cause actual outcomes to be materially different. The Company expressly disclaims any obligation to update any of the forward looking statements in this announcement
Enquiries:
Apex Fund Services (UK) Ltd.
Priya Dhaliah / Paul Spendiff / Robert Kelly020 3697 5368
Pollen Street Capital Limited
Chris Palmer / Johnathan Moyes020 3728 6750
Liberum
Simon Atkinson / Chris Clarke / Joshua Hughes020 3100 2000