P2p Global Investments Share Discussion Threads

[davebowler] 05/11/2019 09:51

Now PSSL Pollen Street Secured Lending

[davebowler] 13/9/2019 09:59

Liberum;
yield 5.8%

Event

As previously reported, P2P Global Investments' NAV per share at 30 June 2019 was 964.1p, reflecting a NAV total return of 2.5% H1 2019 (5.1% annualised).


The legacy portfolio continues to amortise down and now accounts for 10% of the overall (16% at December 2018). This run-off portfolio remains volatile (net return of -1.3% annualised in H1 2019) as illustrated by the writedown relating to the URICA Europe position in May. The legacy UK consumer assets have experienced relatively high losses.


As the legacy portfolio amortises, the Investment Manager has been reinvesting the available capital into more specialist and secured asset classes which exhibit lower volatility and a better coverage ratio of income to expected credit losses. Five new origination platforms were introduced to the portfolio in H1 2019, with three benefiting from structural protection.

The new originations are performing strongly and have demonstrated robust credit performance. This continuing portfolio is delivering a net yield which is ahead of target. 66% of the continuing portfolio is now in structured facilities. The continuing portfolio consists of SME loans 31%, Real Estate 47%, and Consumer 22%.


Post period end, the company disposed of its entire interests in Castlehaven Finance, an Irish alternative development and bridging finance lender. P2P Global had a 25% equity stake in Castlehaven Finance, together with other loan and debt interests. The gross proceeds from the sale of P2P Global's interests are c.€250m, representing a 'modest' premium to the carrying value. 50% of the proceeds will be received on a deferred basis to reduce the impact of cash drag. The proceeds from the sale of the position represent approximately 20% of the portfolio value and 31% of NAV.

The fund will also be renamed in due course to more accurately reflect the investment strategy.

Liberum view

The performance of the continuing portfolio remains strong but overall performance has been hampered by the legacy assets. The overall improvement in the portfolio's credit performance is evident from the increase in underlying income in the chart below. The impact of the run-off portfolio and equity positions should decline as the exposure decreases. The sale of the Castlehaven equity position reduces exposure to equity investments by c.£10m.

The change in the investment strategy since 2017 has resulted in a more robust portfolio delivering improved returns with lower leverage. The underlying income performance of the portfolio is broadly in line with the level required to meet a 15p distribution. We expect the company will be able to increase the dividend in the near-term as the weighting of run-off assets decline further.

[spangle93] 10/9/2019 06:02

From a Mister Invastor piece

One other peer-to-peer fund to watch is P2P Global Investments (LON:P2P). Woodford sold his full holding in the £620m vehicle for £80m in the six months to the end of June, but it looks like he still has a significant stake in the Honeycomb Investment Trust (LON:HONY), which is run by the same management company, Pollen Street Capital.

Pollen Street has worked hard to turn around the portfolio and performance of P2P since taking over its former manager, yet the fund still trades on a 13% discount, whereas Honeycomb’s superior performance has left it on an eight percent premium.

There had been speculation that the two could merge, which would probably have resulted in a positive re-rating of the P2P shares, but Woodford’s large holding in Honeycomb’s rarely traded stock makes this difficult unless there is some kind of deal. Adventurous investors might want to take a punt on P2P ahead of a possible merger or they could short HONY in anticipation of Woodford having to dump his 18% stake into a thin market

[davebowler] 27/8/2019 07:53

Liberum;
Event

P2P Global Investments has disposed of its entire interests in Castlehaven Finance, an Irish alternative development and bridging finance lender. P2P Global has provided financing in excess of €385m to Castlehaven since 2016.

P2P Global had a 25% equity stake in Castlehaven Finance, together with other loan and debt interests. The gross proceeds from the sale of P2P Global's interests are c.€250m, representing a 'modest' premium to the carrying value. A portion of the loan proceeds is payable on a deferred basis.

The manager reports a strong pipeline of new opportunities to reinvest the sale proceeds.

Liberum view

The Times reported last month that the manager was exploring a number of options for Castlehaven including a possible sale of the business or its loan book. Castlehaven typically provides loans of between €1m - €20m and offers acquisition financing plus working capital facilities.

The loan and equity interests in Castlehaven represented a significant proportion of P2P Global's portfolio. The proceeds from the sale of the position represent approximately 20% of the portfolio value and 31% of NAV. Three of the top 10 loans in P2P Global's portfolio at December 2018 were loans originated through Castlehaven. To date, the majority of P2P Global's real estate exposure was mainly through Zorin in the UK and Castlehaven Finance in Ireland. The proceeds will need to be redeployed relatively quickly in order to maintain earnings progress. We note that some of the proceeds will be paid on a deferred basis which should alleviate some of the cash drag.

[davebowler] 18/8/2019 06:54

HONY merger off.

[spangle93] 02/8/2019 06:38

12p it is, then

[davebowler] 01/8/2019 09:05

Liberum;
2P Global Investments

1.2% Q2 NAV total return

Mkt Cap £634m | Prem/(disc) -12.0% | Div yield 5.7%

Event

P2P Global Investment's NAV per share at 30 June 2019 was 964.1p, representing a NAV total return of 0.48% in the month. We calculate a 1.2% NAV total return in Q2 2019. NAV returns have been driven by the strong credit performance of the continuing portfolio.

The run-off portfolio has reduced to 10% of the overall portfolio (12% at March 2019) and the manager completed two new investments in structured loans in the quarter. Structured loans represent 66% of the continuing portfolio. These loans benefit from the protection of a first loss position and have security over the underlying loan pools.


Liberum view

NAV performance in Q2 2019 was impacted by he writedown related to the URICA Europe facility in May, reducing NAV by 0.25%. The NAV return in the quarter would have been c.1.5% if the impact from URICA is excluded. This is close to the run-rate required to to meet the 15p dividend target. We expect the dividend to remain unchanged at 12p for Q2. The underlying income performance of the portfolio is robust and and we expect a dividend uplift in H2.

[davebowler] 19/7/2019 07:41

hTTps://citywire.co.uk/investment-trust-insider/news/jefferies-lifts-p2p-to-hold-on-dividend-and-honeycomb-hopes/a1250199?re=66277&ea=252901&utm_source=BulkEmail_Investment+Trust+Insider+Daily&utm_medium=BulkEmail_Investment+Trust+Insider+Daily&utm_campaign=BulkEmail_Investment+Trust+Insider+Daily

[aroon001] 17/6/2019 21:44

Does anyone know why Honeycomb (HONY) can generate 8% a year in dividends doing largely the same thing (and with the same investment manager now) and P2P Global can only manage 4-5% - don't they invest in largely the same assets? Also seems odd that HONY only charges a 10% performance fee with a 5% hurdle rate, and P2P still has a 15% performance fee with no hurdle rate. Just wondering if better to switch out of P2P Global into HONY.

[spangle93] 02/5/2019 12:07

thanks davebowler - looking promising

[davebowler] 02/5/2019 09:05

Liberum;
1.3% Q1 NAV return

Mkt Cap £634m | Prem/(disc) -12.5% | Div yield 5.7%

Event

P2P Global Investments' NAV per share at 31 March 2019 was 964.6p, reflecting a 0.56% NAV total return in the month. YTD NAV total return is 1.3%. Share buybacks added 6 bps in March.

NAV returns have been driven by the strong credit performance of the continuing portfolio. The annualised bad debt expense in Q1 2019 was 1.3%. Post period end, the company completed the securitisation of a £187m portfolio of Funding Circle loans. The transaction has helped to improve the financing terms on the portfolio with the company retaining the junior tranches in the structure. As part of the strategy to focus on secured lending, the manager stopped acquiring Funding Circle loans in Q4 2018. In terms of the portfolio repositioning, the run-off portfolio reduced from 16% to 12% of the portfolio during the quarter.

An unchanged dividend of 12p has been declared for Q1 2019.

Liberum view

We believe the dividend will increase by 25% to 15p per share next quarter (7.1% dividend yield annualised) and this should act as a catalyst for a share re-rating. We believe returns will continue to improve as the weighting of the run-of portfolio declines further. The contrast in performance of the continuing and run-off portfolios is stark with the continuing portfolio producing a net return of 10.2%, compared to 2.4% for the run-off portfolio.

[davebowler] 03/4/2019 09:36

Liberum;
Event

NAV per share at 28 February 2019 was 959.2p, representing an increase of 0.31% in the month. February's NAV performance was impacted by a combination of the lower day count in the month, poor performance from the legacy Zopa portfolio and adverse FX movements. This was partially offset by a 6 bps increase from share buybacks.

The legacy Zopa portfolio has generated a YTD unlevered return of 1.7%. The levered return is negative after adjusting for debt costs. The remaining NAV exposure to Zopa is £46m (6.4% of NAV).

The manager reports that underlying performance of the continuing portfolio remains strong. The wind-down of the legacy portfolio is ongoing and it now represents just 13% of the overall portfolio.

Liberum view

We expect returns to improve as the weighting of the legacy portfolio reduces. The volatile performance of the Zopa loans in 2019 and FX movements have contributed to a YTD NAV total return of 0.8%. This is below the level required to fully cover a target quarterly dividend of 15p. Our forecasts assume a dividend increase from 12p to 15p for Q1 2019 (7.3% annualised dividend yield) but there is potential for this to be delayed by a quarter given returns to date in 2019. We believe the eventual dividend increase will act as a catalyst for a share re-rating.

[davebowler] 05/3/2019 10:39

Liberum;
Event

NAV per share at 31 January 2019 was 968.2p, representing an increase of 0.45% in the month. January's NAV performance was impacted by adverse FX movements (-12 bps). This was partially offset by a 7 bps increase from share buybacks.

The manager reports that underlying performance remains in line with target. In terms of the portfolio repositioning, the continuing portfolio increased from 84% to 86% of the overall portfolio during the month.

Liberum view

We calculate an underlying return of 0.52% after adjusting for the FX movement and share buybacks. The portfolio has generated consistently improved returns since mid-2018 and we expect this to continue as the run-off portfolio reduces. We believe the upward trend in NAV returns and a dividend increase will act as catalysts for a share re-rating.

[davebowler] 05/2/2019 10:37

Liberum;
0.8% monthly return in December

Mkt Cap £630m | Prem/(disc) -14.0% | Div yield 5.8%

Event

P2P Global Investments' NAV per share at 31 December 2018 was 963.9p, reflecting a 0.78% NAV total return in the month. YTD NAV total return is 5.2% (2.4% after the impact of IFRS 9). Share buybacks added 6 bps in December.

December's performance benefited from a number of one-offs and the underlying income performance of the portfolio was broadly in line with recent months (c0.5% per month). One-off gains included two disposals of non-performing loan portfolios at a premium to carrying value, mark-to-market gains on listed equity positions and the disposal of a portfolio of US consumer loans. These were partially offset by an increase in IFRS 9 provisions, reflecting increased global economic uncertainty.

In terms of the portfolio repositioning, the run-off portfolio reduced from 20% to 16% of the portfolio during the month. A portfolio of US mainstream consumer loans was disposed and a new origination relationship started with a US real estate platform.

An unchanged dividend of 12p has been declared for Q4 2018.

Liberum view

The improvement in portfolio performance is demonstrated by a comparison of the continuing and run-off portfolios. The bad debt rate on the continuing portfolio in 2018 was 1.3% compared to 6.1% for the run-off portfolio. The steady reduction in the exposure to the run-off portfolio should lead to increased NAV returns in 2019. The improvement in NAV returns has been achieved with significantly lower leverage. We note the debt to equity ratio reduced again in December to 44% (November 2018: 50%).


In our recent note, we projected that the Q4 dividend would increase to 15p given the improved portfolio performance. The board has decided against increasing the dividend at this stage but we expect the dividend will increase from next quarter and we leave our dividend forecasts unchanged at 60p for 2019 (25% increase on 2018). We believe the upward trend in NAV returns and a dividend increase will act as catalysts for a share re-rating.

[spangle93] 24/1/2019 10:18

Thanks davebowler

Bought these a while back for diversification - they haven't grown as well as I'd hoped (well, at all really), but the divvy has been good

[davebowler] 24/1/2019 10:01

Liberum;
New note: Reappraise ahead of dividend uplift

Mkt Cap £623m | Prem/(disc) -14.8% | Div yield 5.9%

Event

P2P Global Investments’ portfolio has been repositioned over the past 18 months and is delivering significantly improved returns with lower leverage. Consumer exposure has reduced significantly and the portfolio is focused on loans with asset backing and structural protection. We believe the dividend will shortly increase by 25% (7.4% annualised dividend yield), serving as a catalyst for a share re-rating. BUY.

[davebowler] 30/11/2018 09:53

Liberum;
Potential for Q4 dividend increase

Mkt Cap £602m | Prem/(disc) -17.4% | Div yield 6.1%

Event

P2P Global Investments' NAV per share at 31 October 2018 was 953.9p, reflecting a 0.52% NAV total return in the month (6.2% annualised). YTD NAV total return is 3.7% (1.0% after the impact of IFRS 9). Share buybacks added 3bps in the month.

The run-off portfolio has reduced to 23% of the total portfolio (25% at September 2018). The net return on the continuing portfolio remains in line with expectations to meet the target dividend.

The October factsheet contains additional disclosure on the breakdown of both the continuing and run-off portfolios. The continuing portfolio contains a much greater share of SME and real estate loans than the consumer-focused run-off portfolio.


Liberum view

P2PGI's underlying income returns have improved steadily in 2018. We estimate an underlying income return of 0.52% in the month after adjusting for buybacks (3bps) and ongoing amortisation legacy costs (-3bps per month). This is in line with the level required to meet a 15p dividend. Returns should continue to improve as the legacy portfolio winds down resulting in an increased dividend. We believe this will help to drive a re-rating form the current -17.4% discount (15p target quarterly dividend implies 7.6% dividend yield). Partners of the investment manager have recently acquired in excess of £1.5m of shares in the company, demonstrating confidence in the outlook for the portfolio performance.

[davebowler] 28/9/2018 11:39

Liberum;
Underlying income approaching dividend target

Event

P2P Global Investments' NAV per share at 31 August 2018 was 953.9p, reflecting a 0.50% NAV total return in the month. YTD NAV total return is 2.7% (0.1% after the impact of IFRS 9). We estimate share buybacks added 4 bps to August's performance.

Liberum view

P2PGI's underlying income returns have improved steadily in 2018. We estimate an underlying income return of 0.49% in the month after adjusting for buybacks (4bps) and ongoing amortisation legacy costs (-3bps per month). The underlying income returns in July and August have been broadly in line with the level required to meet a 15p dividend. Returns should continue to improve as the legacy portfolio winds down (30% of portfolio at June 2018) resulting in an increased dividend. We believe should help to drive a re-rating form the current -18.8% discount (15p target quarterly dividend implies 7.7% dividend yield).

[davebowler] 06/9/2018 14:10

Liberum
Progressing portfolio transition

Event

As previously announced, P2P Global Investments' NAV at 30 June 2018 was 956.2p per share (IFRS 9 basis). NAV total return in H1 2018 was 1.7% (-0.9% after IFRS 9 adjustments). Returns in the period have been impacted by weak performance in legacy UK consumer assets, a writedown in the URICA equity investment (0.74% of NAV) and other legacy items.

Management report progress in transitioning the portfolio. The proportion of the portfolio in continuing investments has risen from 52% at December 2017 to 70% at 30 June 2018. The remaining legacy portfolio continues to drag on returns although the impact on NAV is declining as the company reallocates capital into new investments. The continuing portfolio comprises real estate loans (45%), SME loans (42%) and consumer (13%).

The continuing portfolio has generated an annualised net yield of 9.3% over the past six months. This comprises a gross yield of 10.8% and bad debt expense of 1.5%. This compares to a 2.4% net yield for the run-off portfolio (8.0% net yield and 5.6% bad debt expense).

Liberum view

The manager is making steady progress with the portfolio positioning as demonstrated by the improved underlying NAV return in recent months. The annualised NAV returns excluding buybacks and one-off items in June and July were 5.3% and 5.5%, respectively. This is below the target set in November 2017 of a covered 15p dividend by the end of Q2 2018. The URICA write-off and the potential for volatility in the legacy investments is unhelpful but the potential impact is steadily declining as the company recycles capital into new loans. The shares trade on a -18.4% discount to NAV and we believe the prospective 7.7% dividend yield (based on 15p quarterly dividend) should help to deliver a re-rating.

[davebowler] 03/9/2018 08:37

Liberum;
Event

NAV per share at 31 July 2018 was 961.12p, representing a monthly NAV total retun of 0.52%. We estimate share buybacks added 5 bps to the NAV return in the month.

Liberum view

July was the best month so far this year in terms of performance. YTD, NAV total return is c.2.2%. Based on information from June, we would expect that the transitioning of the portfolio to more attractive asset classes, reducing the exposure to the low yielding and volatile legacy assets has continued. The shares are currently trading at -19.4% discount to NAV.