Victory Park Capital (VCP) has announced a new issuance of common shares to raise another £200 million for VPC Specialty Lending Investments (VSL). The offer price is expected to be £1.00 per C share. The shares presently trade on the LSE.
According to the firm, up to 500 million shares may be issued in the coming months. The funding raised is invested in direct lending platforms including Marketplace /Peer to peer lending sites. The Company is targeting a net dividend yield of 8% and a net total return in excess of 10% per year following full investment. The yield on the Company’s current portfolio is in line with expectations in order to meet this target dividend yield for ordinary shareholders.
Since the IPO in 2015, VPC has been able to “rapidly” invest proceeds, bullying investing the funds. According to the investment manager, they continue to see a strong pipeline of investment opportunities across a range of specialty lending platforms. Over the last 5 months, across the company and other investment vehicles it manages, the manager has been deploying capital at an average monthly rate in excess of $120 million. VPC states that near term opportunities include greater capacity with existing platforms, through organic loan growth, geographic breadth and product expansion, including multiple products which are proprietary to the investment manager. Additionally, further opportunities exist to gain exposure to new platforms including several with which the Investment Manager has existing platform agreements.
The company also reported that shares in VSL have become “ISA eligible” as of July 15, 2015. This represents a significant tax benefit for UK shareholders to leverage the tax exempt status of the VSL shares.
The Board of Directors of VPC have retained “flexibility” by assuming an initial issuance of up to 200 million C Shares but would have the authorization to issue a further 300 million shares in aggregate. The benefit to holders, according to the Board of Directors, are:
- the net proceeds will be used to take advantage of near to medium term opportunities to make further investments in the specialty lending sector in accordance with the Company’s investment policy and investment objective;
- the additional monies raised will enable the Investment Manager to further diversify the Company’s portfolio;
- allow the Company to tailor future equity issues to its immediate pipeline of investments, providing flexibility and minimising cash drag;
- the option to issue C Shares will avoid dilution of existing holdings until at least 90 per cent. of the proceeds of any C share issue are deployed; existing holders would therefore not be participating in a portfolio containing a substantial amount of un-invested cash before the conversion of any C Shares in issue;
- enable the Company to issue new Shares tactically so as to better manage the premium to Net Asset Value per Share at which the Shares may trade;
- an increase in the size of the Company should improve liquidity and enhance the marketability of the Company, resulting in a broader investor base over the longer term; and
- enable the Company to grow, thereby spreading fixed costs over a larger capital base which should reduce ongoing expenses per Share.
Jefferies International Limited is acting as sole broker, sponsor and bookrunner in relation to the Issue.