VPC Specialty Lending trades at 32.56pc discount to NAV as wind-down progresses

VPC Specialty Lending Investments (VPC) reported a negative net return of -£0.82m for the first quarter of this year, as it continues with its managed wind-down.

The alternative finance-focused trust entered a managed wind down on 12 June 2023 after the move was approved by shareholders at its general meeting.

Investors were concerned about the level of the discount of the trust’s share price to net asset value (NAV).

The first-quarter results showed that shares were trading at a 32.56 per cent discount to NAV as of 31 March 2024, compared to 18.18 per cent over 2023.

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The VPC investment portfolio measured at fair market value had a converted cost basis of £57.8m and a carrying value of £70.3m, as of 31 March 2024, according to the document.

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Listed debt funds have fallen out of favour in recent years and VSL has struggled to attract investor support despite solid returns. In 2020, it lost a few major shareholders including Invesco and Woodford Investment Management which cemented its demise.

“We believe a challenge to attracting demand is the unusual strategy which is a combination of lending to niche and emerging lending businesses, as well as equity stakes,” Numis analysts previously said. “We believe part of the reason the fund has struggled to attract demand is that it is difficult to put in a ‘bucket’ for many shareholders, with a higher return/risk profile than a typical debt fund, given exposure to both lending facilities and equity stakes of, often emerging, specialist lending platforms.”

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