Twentyfour Inc Regulatory News (TFIF)

TWENTYFOUR INCOME FUND - Market update and intention to issue equity

PR Newswire

London, August 16

THE INFORMATION IN THIS ANNOUNCEMENT IS RESTRICTED AND IS NOT FOR PUBLICATION, RELEASE OR DISTRIBUTION DIRECTLY OR INDIRECTLY IN OR INTO OR FROM THE UNITED STATES, CANADA, AUSTRALIA, THE REPUBLIC OF SOUTH AFRICA, THE REPUBLIC OF IRELAND OR JAPAN.

16 August 2016

TwentyFour Income Fund Limited

("TFIF" or the “Company")

Market update and intention to issue new ordinary shares

Market update

The Board and Portfolio Manager believe there is significant opportunity to deploy additional funds with favourable returns given prevailing market conditions. In relation to the opportunity, Ben Hayward of the Company’s Portfolio Manager, TwentyFour Asset Management LLP, comments:

“Extraordinary intervention by central banks continues to drive markets, and has materially changed the yield opportunity in many parts of the fixed income universe. Sterling assets have been the most recent beneficiary of these moves following the Bank of England’s implementation of further easing. This has led to a material change in value as Gilts and Corporate Bond supply has been sucked out of the market through direct Bank of England purchases.

This yield drain has reduced the risk free rate and pushed credit spreads tighter, but not on an even basis across the board. Assets that have not experienced this yield squeeze will undoubtedly become more sought-after going forward.

The ABS market is a large but specialist component of European Fixed Income, and it is not as directly correlated as other parts of the market. When there is a material change in risk sentiment, this permeates through the more widely-held markets – gilts, corporates – then through financials, high yield, and then to senior ABS and ultimately mezzanine ABS. This “delayed reaction” on the way down, and importantly the way up, has been seen in many periods of significant volatility – 2009/10, the third quarter of 2011, the start of this year, and post referendum.

TwentyFour Income Fund invests in mezzanine ABS and currently has a BBB- weighted average rating* and a 4-year weighted average life. The portfolio currently has a gross yield of 7.79%. In comparison the BBB component of the sterling corporate bond market currently yields 1.8%** over gilts.

Recent opportunities include the following:

Hawksmoor 16-1 E

· A vintage UK non-conforming portfolio of residential mortgages originated by GE Money;

· Weighted Average Loan to Value based on current loan size and indexed valuation of 62.3%;

· Most loans were originated by 2008, so have an 8-year track record of borrowers paying their mortgage, and only 0.72% of the pool currently have serious arrears;

· The Class E bonds have a loss cushion of 9.5% via a junior bond and a cash reserve, as well as an expected excess profit margin of c.1.4% extra per annum; and

· They are rated BB/Ba2 with a yield of 6.39% when issued on 5 August 2016.

Aurus 16-1 F

· Securitisation of a seasoned (WA of 7.2 years) pool of Dutch consumer loans and credit cards originated by Qander Consumer Finance, with strong performance and solid track record;

· Qander was set up in 1996 and obtained funding from ABN AMRO and BNP, who still hold all the senior bonds in this transaction;

· Minimum loss cushion of 10% from subordination and reserve fund, also supported by 6-8% of excess cash per annum that can be used to cover losses;

· Deal benefits from strong structural features including, recognising potential losses well before the actual loss and trapping excess cash to cover this, performance triggers and very strong call mechanics (including a turbo); and

· 1-year non-rated bond with a current yield of 12.0%.”

*Based on the WA Rating of the publicly rated portfolio.

**Source: 15 August 2016, Bloomberg, Barclays.

Intention to issue new shares

The Board of TwentyFour Income Fund Limited (LSE: TFIF) today announces its intention to issue new shares.

TwentyFour Income Fund Limited was launched on 6 March 2013 with an investment objective of generating attractive, risk-adjusted returns, principally through income distributions, by investing in a diversified portfolio of UK and European Asset Backed Securities.

In response to continued investor demand and the favourable prevailing market conditions, the Board today announces that the Company is intending to raise additional equity capital through the issue of new ordinary shares of 1p each in the Company (the “New Shares”) (the “Issuance”). The New Shares will be issued at a premium of 2% to the unaudited net asset value (“NAV”) per share as at 19 August 2016, to be published on 22 August 2016 (the “Issuance Price”). The Company's existing Placing Programme set out in the Company's prospectus dated 29 January 2016 (the “Prospectus”) will remain in place until its expiry on 27 January 2017.

Funds raised will be invested in accordance with the Company’s existing Investment Policy.

How to participate

Qualified investors (as defined in section 86(7) of the Financial Services and Markets Act 2000 (as amended)) are invited to apply for New Shares by contacting Numis Securities Limited ("Numis") on the contact details below. The decision to allot New Shares to any qualified investor shall be at the absolute discretion of the Company and Numis. 

Expected timetable

Further information

Further information regarding the Company can be found at the Company's website http://www.twentyfouram.com/funds-and-services/twentyfour-income-fund or please contact:

Important notice

This Announcement has been prepared for information purposes only, it is not a prospectus. Recipients of this Announcement who are considering acquiring New Shares in the Company in connection with the Issuance are reminded that any such acquisition must be made only on the basis of the information contained in the Prospectus and any supplementary prospectus(es) thereto which may be different from the information contained in this Announcement. This Announcement does not constitute or form part of and may not be construed as an offer to sell, or an invitation to purchase, investments of any description, nor as a recommendation regarding the possible offering or the provision of investment advice by any party. No information in this announcement should be construed as providing financial, investment or other professional advice and each prospective investor should consult its own legal, business, tax and other advisers in evaluating any investment opportunity. In particular, an investment in the Company involves a high degree of risk and prospective investors should read the section in the Prospectus entitled "Risk Factors" for further information.

Any data on past performance, modelling or back-testing contained herein is no indication as to future performance and there can be no assurance that targeted or projected returns will be achieved, that the Company will achieve comparable results or that the Company will be able to implement its investment strategy or achieve its investment objectives. All opinions and estimates are given as of the date hereof and are subject to change. The value of any investment may fluctuate as a result of market changes.

Ordinary Shares have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the "Securities Act") or with any securities regulatory authority of any state or other jurisdiction of the United States and the New Shares may not be offered, sold, resold, transferred or delivered, directly or indirectly, within the United States or to, or for the account or benefit of, U.S. Persons. There will be no public offer of the New Shares in the United States. Subject to certain exceptions, the New Shares are being offered and sold only outside the United States to persons who are not U.S. Persons in reliance on the exemption from registration provided by Regulation S under the Securities Act.

Moreover, the Company has not been and will not be registered under the Investment Company Act of 1940, as amended (the “Investment Company Act”) and investors will not be entitled to the benefits of the Investment Company Act. The New Shares and any beneficial interests therein may only be transferred in an offshore transaction in accordance with Regulation S (i) to a person outside the United States and not known by the transferor to be a U.S. Person, by prearrangement or otherwise; or (ii) to the Company or a subsidiary thereof.

The distribution of this Announcement in certain jurisdictions may be restricted by law. No action has been taken by the Company or Numis that would permit an offering of any New Shares or possession or distribution of this Announcement or any other offering or publicity material relating to such New Shares in any jurisdiction where action for that purpose is required. Persons into whose possession this Announcement comes are required by the Company and Numis to inform themselves about, and to observe, such restrictions.

Certain statements in this Announcement are forward-looking statements which are based on the Company's expectations, intentions and projections regarding its future performance, anticipated events or trends and other matters that are not historical facts. These statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. Given these risks and uncertainties, prospective investors are cautioned not to place undue reliance on forward-looking statements. Forward-looking statements speak only as of the date of such statements and, except as required by applicable law, the Company undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

The information contained in this Announcement is subject to change without notice and neither the Company nor Numis assume any responsibility or obligation to update publicly or review any of the forward-looking statements contained herein.