VSL’s value drops below £300m as discount to NAV widens
VPC SPECIALTY Lending’s (VSL’s) total net assets attributable to shareholders dropped to £299.9m at the end of the first half of this year, while the investment trust extended its discount to net asset value (NAV).
During the first six months of 2018, VSL’s net assets reached £331.7m, while the discount to NAV was 12.94 per cent. By comparison by 30 June 2019, the discount to NAV was 21.72 per cent.
However, VSL chairman Kevin Ingram told investors that there are signs that the trust’s discount to NAV is beginning to reduce, pointing out that the NAV per share had actually risen over the course of the year, from 90.74p in June 2018, to 92.23p in June 2019.
“We are acutely aware of the discount of the share price to NAV and we are determined to continue to use the variety of tools at our disposal to mitigate this,” Ingram said.
“We are heartened that there has already been some progress in reducing the discount since 30 June 2019. The discount to the most recently published NAV as at 31 July 2019, less the dividend declared in August, has narrowed the discount to 12.27 per cent based on the closing share price of 80 pence per share as at 25 September 2019.”
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Former star fund manager Neil Woodford divested his entire stake in VSL at the end of April, as part of his efforts to meet a flurry of investors’ requests for redemptions.
VSL said that this presented opportunities to buy back shares in sizeable numbers. According to the company’s half-year results, 34,881,241 shares were repurchased in the first six months of this year, compared with 4,616,891 in the first six months of 2018.
Read more: VPC Specialty Lending shrugs off Woodford sale with record quarterly NAV
In the six months ending June 2018, NAV per share was 4.27 per cent, while the investment trust posted a 12-month NAV return of 8.96 per cent on 31 December 2018. By the end of June 2019, NAV per share was at 5.73 per cent.
Ingram added that VSL was monitoring the company’s foreign currency exposure closely and reassured investors that the company’s US dollar investment exposure is fully hedged.
“The addition of the gearing facility allows us to reduce the cash drag within the company while also providing us with a reserve to deal with currency volatility that might accompany Brexit,” he said.
Investments in US portfolio companies accounted for 72 per cent of VSL’s invested portfolio in the first half of the year, while UK companies made up seven per cent of the portfolio, with the remainder being invested in Europe, Latin America and Africa.
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