|Sme Loan Fd
||EPS - Basic
||Market Cap (m)
Sme Loan Fd Share Discussion Threads
Showing 26 to 49 of 50 messages
|@orinocor - but remember that relies on someone actually buying! As yet, it's up in the air. But per post above, I agree it's good news if they do get the placing away, and SQN appointed. I'd not have bought in otherwise.|
|My intepretation is not as negative as spec's and makinbuks. I don't believe a large shareholder can sell 45% of a company without it being at a large discount to what might be classed as fair value. So if they are selling it at 90p then whoever is buying must feel they are getting a more than generous deal.|
|@Kenny - best to read the recent RNS, they're about to undergo some big changes, in recognition of the fact that the co hasn't really succeeded in its original aims.|
|I don't know this company well so could someone who does comment on the following. The company does not seem to be producing sufficient returns to cover dividends so effectively the dividends are mostly return of capital?|
|Think we all agree the placing needs to get away, but WINS now below 90p on the offer - must be an element of "why take the placing price when can buy cheaper in the market".|
|From 90p to 115p in 5 years is a good return for people who have completely given up on life. Anyone paying 90p would have to be expecting a much better return than that surely?|
|Had a quick look at SQN Asset Finance Income Fund Limited and you can see the model they are trying to replicate here. Could be great if the placing gets away. Growing to the size they envisage depends on the shares being rated at a premium to NAV. GLIF and associates had the same plan|
|This is also significant:
"provide shareholders with an opportunity to vote on the continuation of the Company if it has not grown its net assets to more than £250 million by 31 December 2019."
So SQN have ambitious plans to raise funds and clearly see the demand to place that in the markets in which they operate|
|Also assumes little default risk?
I'm happy to buy here - but in the expectation it all goes through.|
|Today assets are c £53m costs are about 2% or £1m. To run off you need to maintain a company structure for maybe 5 years during which time costs reduce in a linear fashion to £200k in yr 5. Total costs £3m. Average loans outstanding through the 5 years of £24m (50% of current £48m) at 9% gives income of £11m. So you'd realize maybe £61m or £1.15 per share
That's very rough and rounded off the top of my head with no real research but its that sort of calculation that SQN are doing. Plus they get fees on the AUM as well.
So 90p is attractive if you have a medium to long term view but £1.15 in five years time is no use to you if you have loans to repay next month|
|Based on what you are posting why would anyone pay 90p for 45% of this company?
The NAV figures they publish every month, are they just made up numbers with little basis on reality?
What would you expect to get back if the book is run off? TIA.|
|If it doesn't complete, GLIF will seek to get the cash from the wind up asap via the above mentioned secondary market. Assuming c. 25% of NAV in cash plus March - May repayments that leaves 75% or c.40m to sell at a discount. the question is how big is that discount? From GLIF's point of view 10% would be fine. However the gross yield is c. 9% and we have less than 1% assumed for default so that's optimistic.
So for example very roughly £13m at 100% and £40m sold at a 15% discount makes a 12% overall discount to NAV slightly worse than the current 90p.
I conclude we would prefer the deal to go through and see the book run off|
|Agreed - made me wonder why they'd picked the price already. Why not just say "subject to demand" or similar.
Edit - 90p must of course have been the price they agreed with SQN, who'll take "up to £7m" (placing is c.£22m in total).
If it all goes through, I reckon it's a good deal, and have bought some this morning. The risk if it doesn't is encapsulated by:
"..The weighted average maturity date of the portfolio was 2.8 years.
Amberton considers that it would be possible to expedite an orderly realisation with secondary transaction in some of the Company's investments. However, it could still; take a significant period of time to realise the Company's portfolio in its entirety."
And of course, it'll be several years before SQN are managing all of it, hence I guess the lowish dividend target. Amberton would be kept on as sub-manager initially.|
|spec, That's interesting.|
|@orinocor - I called them this morning & didn't learn a lot, but def isn't done/dusted yet.|
|It's almost certain the 90p placing is done and dusted otherwise they wouldn't have mentioned it. More than probably its a better deal for buyers at 90p than it is for the sellers GLIF who need the funds to pay off a loan.|
|Agreed, run off costs are a threat to our 10p nav. However, 12% current cash with repayments of 6.5% in March and 4.5% in May(from the list of major loans) is a good start|
|SQN are good; I'd worry more about the residual portfolio, how easily it runs off, and at what sort of cost.
90p for the placing perhaps says it all - and it won't be for a few weeks so share price set to drift.
If they don't get the placing away then they're slowly winding up, & 90p might then prove optimistic (particularly vis a vis costs on an increasingly smaller portfolio).
Agree there was an element of "dead man walking" about SMEF - but outcome still uncertain as yet.|
|1. The dividend was not supported by the fundamentals of the business so a re-alignment was inevitable. If you have costs of c. 2% and you target a gross return of 8% you are assuming secured lending at 10% which is unlikely in the current market. In addition several of the biggest loans are due to be repaid shortly some of which, to be fair, had attractive rates but it was always going to be a struggle to replace them. On top of that there is already a drag effect of 12% cash.
2. GLIF are in the middle of a significant restructuring. They had a loan to repay in March and needed to realize their asset.
3. The tender offer was an attempt to ensure the share price tracked nav and it backfired
GLIF originally intended SMEF to be much larger and considered it sub optimal at the current size. They foresaw a virtuous circle of new shares being issued at a premium to NAV and reinvested in attractive loans lowering fees in % terms.
The model has not worked so this is simply plan B.
Still attractive however in my view. At the end of the day we still have 100p of value to be realized in the next 2 years despite today's SP
I don't have a view on the new manager or what direction he will take the business. More research needed there|
|Great little income stock this one. Looking forward to the tender offer next month although I don't expect to be able to tender more than 10%.|
|January monthly factsheet
|just topped up with idea of tendering at NAV in March
next monthly ex-div date is 2nd Feb with payment on 3rd|
|Ha here is confirmation. The discount is 6.7% just now and NAV is 100.42p will be able to tender at 100.42p in March
Next oldest of these funds is SME Loan fund (SMEF). It has just passed its first birthday, generating a creditable 6.1% NAV return over the last 12 months. Loans to businesses make up 100% of SMEF’s portfolio and 82% of its lending is secured. Its currency exposure is hedged, it is not geared and, unlike most of its peers, it is not trying to boost returns by investing in platforms (a nice idea but a very different risk proposition).
I recently stepped down from the board of GLI Finance anymore and have no holding in SMEF, so I am not as biased as I might have been, but I like SMEF’s steady approach.
It is trading on a 5% discount but there’s an opportunity next year for investors to cash in part of their holding at a price close to asset value so this discount ought to narrow. SMEF also has relatively low management fees – 0.75% on the first £100 million of assets and 0.5% on the balance and no performance fee.
If you are right then Smef shareholders will be able to tender their shares in March at NAV which is 100.42p.|