Sme Loan Fd Share Discussion Threads

[makinbuks] 10/5/2017 14:22

I've started an SSIF thread to keep up with events

[spectoacc] 27/4/2017 15:00

"The change of name to SQN Secured Income Fund plc will be effective from 28 April 2017 and the ticker for the Ordinary Shares will be changed to SSIF with effect from 2 May 2017. "

[spectoacc] 27/4/2017 06:43

@Makinbuks - agree it's a pity SQN have slipped up a bit re solar. Though previous C-issues have been so oversubscribed, I'd be surprised if they didn't get them away at SMEF too.

And if they don't, and don't get to a £250m mkt cap - we get our money back.

[makinbuks] 26/4/2017 17:04

Spec, I see you post on the SQN board too so are up to speed with developments there. I must say I'm a little concerned now that they'll be able to repeat the C share issue here now as planned. Reputation is everything in the market. To be fair they seem to have dealt swiftly and transparently with the issue but with that and Ranger having an issue too I wonder if this sector is going to suffer now?

[spectoacc] 12/4/2017 15:48

True, although I bet they'll raise via a C-share issue, so cash drag on SMEF won't be so relevant. But they're unlikely to dive straight in I agree.

[makinbuks] 12/4/2017 15:30

In act the comments in the latest factsheet published today indicate that the 26% cash balance will be reinvested rapidly direct loans through SQN and platforms. Looks like c. 10% is repaid also in May so SQN may not look to fund raise until that c.£19m is lent. Otherwise meeting the monthly dividend will be threatened by cash drag

[makinbuks] 12/4/2017 14:40

Agreed, especially in relation to SQN and the future. I am not familiar enough with RDL, P2P or VPC to comment. I think we have yet to see a clear strategy from SQN on future areas for investment. They surely have to differentiate from the existing fund somehow and having leg in the direct SME market through Amberton longer term might be a possibility

[spectoacc] 12/4/2017 13:15

RDL very different IMO - buys in secondary market, ie loans originated elsewhere. Is more like (the dire) P2P or VPC.

I guess could argue the original SMEF (ie the Amberton-originated, GLIF-sponsored) book is more similar to RDL, at least from the point of view of SQN, but would hope they went very thoroughly through it first. The fact they made GLIF take on some of the loans suggests that.

Also, if/when more funds are raised, they'll be managed directly by SQN - and SQN Asset Finance Income Fund trades at a thumping premium.

Still - none of this lot (and others similar) have been tested in a bear market. "Asset-backed" is one thing, but in a 2008/09 collapse it'll be interesting to see how they cope. Lack of gearing is a plus at least..

Scary thing about P2P & VPC is how they've performed even in a bull market.

[makinbuks] 12/4/2017 12:53

see Ranger Direct have experienced some bad debt issues which might have a knock effect on the way the industry is rated by the market

[makinbuks] 12/4/2017 12:51

Sounds sensible to me

[spectoacc] 12/4/2017 08:59

From what I recall of the original RNS, Amberton will disappear once the loans they originated are finished. Will be all SQN from then on.

Been slowly topping up, not because it's the raging buy it was at 90p but because it's still at a slight NAV discount, and any eventual share issuance (none imminent) going to be at a slight premium.

[makinbuks] 06/4/2017 12:54

The current loan book at £50m with a high proportion of repayments or cash by May will be dwarfed by the new activity if it gets anywhere near the £250m sought in the announcement yesterday. I am not clear if the Alternative Finance activity is to continue with Amberton as sub manager or if it is effectively in run off

[makinbuks] 05/4/2017 17:24

Good to see SQN quick off the mark

[makinbuks] 05/4/2017 17:24

Another name change!!

[spectoacc] 14/3/2017 15:36

You'd think his maiden purchase would be at 90p placing price, but he's still paid less than NAV:

"The Company was notified on 14 March 2017 that Mr Richard Hills purchased 15,294 Ordinary Shares on 14 March 2017 at a price of 97.50p per share. "

[spectoacc] 13/3/2017 12:36

A lovely rise back up, yet still trading below NAV. Hope SQN can get the cash currently in the co to work ASAP.

[james188] 10/3/2017 09:02

There were much earlier transfers between SMEF and GLIF which included GLIF taking back some impaired loans. I believe that SMEF has closely monitored the quality of the portfolio and the performance (including recent loans acquired from GLIF platforms)has been good. As you say, SQN would also have conducted DD on the portfolio.

[spectoacc] 10/3/2017 08:35

Thanks for comments @james188, interesting to hear from someone who's been in SMEF from the start.

Hoping/expecting that SQN had a good look at the portfolio before agreeing to take it on - kitchen-sinking was my only concern. Am sure part of that process is why they made GLIF take on part of the book. The original SMEF book will become less important over time, particularly after SQN have raised more cash, as I'm sure they will do over the next year.

[james188] 08/3/2017 18:16

I have been a holder of SMEF since it launched and I am also a long term shareholder in GLIF. Actually, I am pleased with this deal from both those perspectives and relieved that it went through. The alternative would have been much worse.

SMEF never achieved anything like the intended size that was hoped for, although it has actually performed well in comparison to its peer group. This was partly down to the general malaise in the sector, but it is clear that investors have never been comfortable with the GLIF relationship, despite a number of tweaks to the original structure. As such,it was inevitable that the parties would need to go their separate ways.

A higher placing price would have been nice for GLIF, but it was really important that this placing was successful - and this for general credibility as much as to provide funds to pay off the expensive Sancus loan.

SQN provided an effective partial underwrite up to £7 million and so I think that the placing price had to be announced in advance. Probably not a coincidence that 90p per share was the written down value for the SMEF shares set out in the end June 2016 GLIF interims as part of a kitchen sinking exercise. It would have been hugely difficult for GLIF to accept a lower strike price. SMEF as managed by SQN has a different focus and so I also think that it made sense to exit some GLIF related loans - although it seems that some remain. It would be interesting to learn which ones - maybe those where the British Business Bank/Irish Strategic Investment Fund are co-lenders?

Time to move on.

[makinbuks] 08/3/2017 11:14

Hopefully all those disappointed in the placing will look ad n the market

[makinbuks] 08/3/2017 11:11

Yes topped up this morning. Very excited about this now. SQN can make an immediate impact with the funds already on the BS plus the £5m from GLIF and the substantial repayments due in April and May. Getting on for 30% of NAV isn't it? Need to do the maths. Medium term get the price up around NAV then look to further placings at a premium

[spectoacc] 08/3/2017 10:28

Interesting seeing the trades pile through - in particular, somebody took 25.3m shares in the placing, and from my guesstimate of the scaling back, had asked for nearer 48m.

Appears to be at least 20 separate new holders from the trades so far - the 3.3m is of course SQN's shares. Not sure about some of the suspiciously round numbers (2x 1m, 1x 250k) & how they relate to my guess at the scaling back %.

Any which way, significantly more demand at 90p than could be supplied. The losers are GLIF, who clearly could have got more than 90p for their stake. Then again, with a loan due for repayment on the 15th, getting it away was the priority.

[spectoacc] 08/3/2017 07:41

Substantially oversubscribed and scaled back - have to wonder why it fell to 89.5/89.75p.

GLIF also buying a few loans - seems SQN didn't want them despite the yield, but all good in hastening the repositioning fo the portfolio:

"Sale of Investments
Following its due diligence on SMEF's portfolio of loans, SQN identified a number of performing loans in the portfolio that are inconsistent with SMEF's proposed future investment strategy. GLIF has agreed to acquire these loans for cash at their aggregate face value (including accrued interest) as at 10 March 2017 of GBP5.27 million. Completion of the sale of these loans is expected to take place on or around 14 March 2017. "

And SQN only getting 3.3m shares, not £7m - does that indicate the extent of the scaling back?:

"SQN will acquire 3.3 million Placing Shares, representing 6.3% of the Company's issued share capital."

All looks good to me - the outcome we all wanted. Expecting a return to £1 in time, and wouldn't be surprised if next placing around that level, in say the next year IMO.