Honeycomb Investment Trust (LON: HONY), a company specializing in investing in credit assets originated by non-bank lenders and other originators of various lending assets, mainly in the UK, is reportedly considering a potential £1.5 billion merger with Pollen Street Secured Lending (PSSL), in order to establish the largest listed investment trust that’s focused on the specialty finance market.
Pollen Street Secured Lending (PSSL) was previously called P2P Global Investments. It’s a British investment trust. The firm invests in consumer and SME loans and also in corporate trade receivables.
Honeycomb has reportedly received support from its major shareholders, including AXA Investment Managers, Standard Life Aberdeen, Thesis Asset Management and Quilter Investors. These firms have all agreed that a merger may be in the “best long-term interests of both companies and their respective shareholders.”
The merged entity will have combined investment assets valued at around £1.5 billion. The merger should help with “enabling [the business entity] to continue to capitalize on attractive investment opportunities.” The transaction should also help with “ensuring a stable NAV return to shareholders,” according to an analysis performed by Honeycomb’s management.
The strategic merger should also help with lowering operating and management costs, while creating a more diverse investment portfolio. This should lead to a better overall position for “changing economic cycles” for all stakeholders, the companies said.
The companies are interested in getting the merged entity listed on the FTSE 250, which could potentially improve its liquidity.
PSSL’s shareholders will be able to receive 0.9335 of Honeycomb’s outstanding shares in exchange for each ordinary share of PSSL (according to the terms and conditions of the potential merger).
If the transaction is completed, then PSSL shareholders will be able to receive any dividends up to 12p per share for the 3-month period ending on June 30, 2020 and also the 3-month period to September 30, 2020.
PSSL shareholders could own around two-thirds (65.3%) of the new company, if the transaction is finalized.
A Honeycomb representative stated that the company’s board thinks that there’s a potential opportunity for shareholder value creation that may result from combining the operations of Honeycomb and PSSL. The representative said that the merger may help create “the leading listed investment trust dedicated to providing finance to the specialty finance market.”
The representative also mentioned that the Honeycomb board members believe that the combination of PSSL and Honeycomb will serve the best long-term interests of both firms and also their shareholders.
Honeycomb and PSSL focus on offering alternative finance investments. Both companies are currently managed by business owners that work with Pollen Street Capital, an alternative asset manager.
Honeycomb stated that it would make an official announcement by 5 pm on September 3, 2020, if all stakholders decide to finalize the transaction. This would be in accordance with market rules, the companies confirmed.