SQN Secured Income Fund PLC Portfolio Update (8807M)
August 02 2017 - 4:45AM
UK Regulatory
TIDMSSIF
RNS Number : 8807M
SQN Secured Income Fund PLC
02 August 2017
For immediate release 2 August 2017
SQN Secured Income Fund plc
Portfolio Update - positive momentum - Fund now fully
committed
SQN Secured Income Fund plc (LSE: SSIF) (the "Company" or
"SSIF"), a UK-listed specialist investment trust with a focus on
secured investments that produce regular income, is pleased to
update shareholders of SSIF on the progress made since SQN Capital
Management, LLC together with its UK subsidiary SQN Asset
Management Limited (together "SQN") were appointed as the Company's
investment managers on 1 April 2017.
Highlights
-- Appointment by SQN of Dawn Kendall as managing director with
effect from 1 August 2017 and other key hires in pipeline
-- Strategic review and resulting rationalisation of
platform-originated or related investments completed
-- Full commitment of available cash primarily into SQN-originated transactions
-- Gross yield on portfolio expected to rise approximately to 8.6%(1)
-- On track to pay targeted dividend of 6.25p per share for current financial year(2)
Strategic Review
Following its appointment in April 2017, SQN has completed a
thorough strategic review of the Company's platform
investments.
At the time of SQN's appointment, approximately 31% of the
Company's assets were in cash with the remainder already invested
via platforms and through working capital loans to platforms.
Following the review, a decision has been taken to cease making
working capital loans to platforms and to reduce the number of
platforms through which the Company conducts business. The
selection of preferred platforms has been made after an in-depth
analysis of their credit processes and sector preferences, with a
focus on diversification, "best in class" and transparency. The
Company is confident that relationships with these remaining
platforms are strong and will continue to provide consistent
attractive deal flow. In the future, the Company expects the
percentage of the Company's portfolio represented by
platform-originated loans to reduce in favour of direct lending
using SQN's own origination capabilities. However, as the Company
grows, the amount of funds that the Company will continue to
allocate to platforms will remain meaningful.
Almost a third of the Company's assets have now been invested or
committed under the SQN mandate with the available cash primarily
deployed into direct lending opportunities originated by SQN. The
nature of these direct loans is diverse and provides high levels of
security with regard to covenant provision. Each loan has been
established making use of SQN's extensive network of industry
contacts and all loans have been extended at rates of interest
commensurate with exceeding the Company's target returns (a target
annual dividend of 6.25p per share for the current financial year,
increasing to at least 7.0p per share with effect from July 2018,
and a target annual total return of at least 8%(2) ).
Examples of the loans extended include:
-- A loan to a specialist medical equipment provider which
delivers unique laser therapy in the field of tumour treatment.
Unusually, this company has been awarded a long, seven-year
contract with the NHS.
-- SQN has been active in film finance for some time and the
team has built a strong relationship with a valued production
company in this sector. Working with SQN's partners, SSIF has been
able to structure loans against pre-release sales receivables from
major studios and distributers, thereby providing a high level of
security.
-- Loans to two businesses in the finance sector, a leasing
business offering facilities to retail operations across the
country and a market leading company offering working capital loans
to a broad spectrum of UK-based businesses. Both companies have a
strong reputation, operate away from the web-based "peer to peer"
lending sector and have had below-average defaults over the history
of their loan origination.
The Company has additionally made further commitments to a
listed specialised LED manufacturer based in the UK and
Ireland.
All loans have been negotiated at good commercial rates, meeting
the Company's requirements after fees and expenses for its target
returns to shareholders(2) . Most pleasing is that the loans are
with businesses with whom the Company expects to nurture long term
relationships as they grow.
SQN's Investment in Infrastructure
As previously announced, to strengthen its team, SQN has
appointed Dawn Kendall as managing director. In addition, SQN has
made further experienced hires for its credit, portfolio reporting
and legal teams. SQN intends to recruit further personnel in
administration roles in the final quarter of 2017. This commitment
is in preparation for future growth of the Company and SQN's direct
lending business generally and is indicative of the importance of
this division to the SQN group.
SQN's investment approach recognises the significance of strong
processes and a robust governance regime and, accordingly, each
drawdown requires a "triple lock" sign off from its legal, credit
and portfolio management teams. This is in addition to the
extensive portfolio management capabilities SQN inherited within
Amberton Asset Management.
Outlook
The Company has made good, solid progress on process,
governance, credit quality, rationalisation of platform investment
and secured direct lending since SQN's appointment. The outlook for
direct lending opportunities remains very promising, and the
Company already has an abundant pipeline of investment
opportunities to consider during the coming months.
Notes:
(1) Based on invested and committed capital as at July 2017.
(2) These target returns are targets only and not profit
forecasts. There can be no assurance that the targets can or will
be met and they should not be seen as an indication of the
Company's expected or actual results or returns. Accordingly,
investors should not place any reliance on the target returns in
deciding whether to invest in the Company or assume that the
Company will make any distributions at all.
For further information please contact:
SQN Asset Management Limited tel: +44 1932 575 888
Neil Roberts
Dawn Kendall
Cantor Fitzgerald Europe tel: +44 20 7894 8016
Sue Inglis
Buchanan Communications tel: +44 20 7466 5000
Charles Ryland/Vicky Hayns/Henry Wilson
This information is provided by RNS
The company news service from the London Stock Exchange
END
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