VPC Specialty Lending Investments PLC
Portfolio Update
Net Asset Value (“NAV”) £ 231,570,212
NAV per Share
83.22p
Share Price (31 December 2023 Close) 66.20p
Premium / (Discount) to NAV -20.45%
Trailing Twelve Month Dividend 8.00p
Trailing Twelve Month Dividend Yield 12.08%
Look-through Gearing Ratio 0.16x
Look-through Gearing Ratio – Company Level 0.10x
Look-through Gearing Ratio – Non-Recourse 0.06x
The Company’s eCommerce investments saw a decline in the month of December in unrealised market value of the equity investments
contributing a net return of -5.18% (-4.54p). The Company’s financial technology (‘FinTech’) investments saw a decline during the month in
unrealised market value of the equity investments contributing a net return of -1.00% (-0.87p). These two are the driver of the overall
unrealised capital loss of -5.46% (-4.79p) for the month.
During December, as previously disclosed, the Company received full repayment of the Applied Data Finance, LLC debt investment on the
stated maturity date, and subsequent to year-end, the Company received full repayment of the Elevate Credit, Inc. and Koalafi (fka West
Creek Financial, LLC) debt investments. These three investments returned $38.0 million of gross proceeds to the Company, before required
repayments of the Company’s gearing facility. Pending the distribution and as noted in the Capital Return Mechanism update below, the
Company has reduced the ongoing borrowing costs in the interim to manage the returns of the Company.
Additionally, the Company exited a majority of the remaining equity investment in VPC Impact Acquisition Holdings (NYSE: BKKT), recognising
a gain of $2.4 million for the Company.
Annual Return Review Summary
For the year ended 31 December 2023, the Company produced gross revenue returns of 13.93% (13.68p) offset by gross capital returns of
-15.85% (-15.57p), expenses of -4.60% (-4.52p) and other returns of –0.58% (-0.56p) for a net return of -7.10% (-6.97p). The table below
outlines the gross revenue and capital returns by sector.
The Company’s FinTech assets continue to produce consistent revenue returns, as highlighted by a 10.05% (9.87p) return during the year.
The reduction in unrealised capital returns for the year was primarily driven by marking the equity investments to potential exit values, as the
Investment Manager evaluates near to medium-term exit opportunities to provide liquidity to the Company. As at 31 December 2023, the ECL
reserve on the Fintech debt investments was £1.6 million. As at 31 December 2023, the FinTech investments (debt and equity together)
represent 65.0% of the gross asset value of the Company’s investment portfolio.
As disclosed throughout the year, the Company’s eCommerce investments saw a decline in unrealised market value of the equity investments
driven primarily by changes in comparable multiples and the terms of potential mergers within the space. The remaining value of the
eCommerce equity positions is £3.9 million at 31 December 2023. The Investment Manager continues to work with underlying portfolio
companies as they right-size balance sheets and evaluate strategic combinations in an effort to maximise shareholder value. As at 31
December 2023, the expected credit loss (“ECL”) reserve on the eCommerce debt investments was £4.8 million, with a minimal increase in
reserves taken during the year. As at 31 December 2023, the eCommerce investments (debt and equity together) represent 25.0% of the
gross asset value of the Company’s investment portfolio.
Investment 2023 Revenue Return 2023 Capital Return
Sector Exposure % of NAV Pence per Share % of NAV Pence per Share
FinTech 65% 10.05% 9.87p -8.24% -8.09p
eCommerce 25% 3.35% 3.29p -8.88% -8.72p
Legal Finance 6% 0.53% 0.52p 0.17% 0.17p
SPAC 4% 0.00% 0.00p 1.10% 1.08p
13.93% 13.68p -15.85% -15.57p
Monthly Report – December 2023
VPC Specialty Lending Investments PLC
- Amounts shown in millions. The table reflects the current stated maturities on the underlying asset backed lending investment facilities and the amounts shown reflect the current carrying value of the
investments less projected paydowns on the Company’s gearing facility. These investments can and may be held for a longer period than the current stated maturities with a view to enabling their inherent
value to be realised successfully. The strategy for realising individual investments and repaying the Company’s gearing facility will be flexible and may need to be altered to reflect changes in the
circumstances of a particular investment or in the prevailing market conditions. Amounts shown in £ millions. - Please refer to the Glossary of Terms posted on the Company’s website.
Asset Backed Lending Investments: Profile of Contractual Maturities less Projected Borrowing Paydowns (As at 31 December
2023)1
Annual Return Review Summary (Cont.)
The Investment Manager is evaluating potential exit opportunities for the Legal Finance and SPAC investments. As at 31 December 2023, the
Legal Finance and SPAC investments represent 10.0% of the gross asset value of the Company.
While there were significant unrealised losses in the investment portfolio during the year, these have been as a result of taking account of
market information as it arises, in accordance with the Investment Manager’s unchanged valuation methodology, as governed by its valuation
policy. The equity investment portfolio overall had a net unrealised gain of £3.3 million as at 31 December 2023, which is above the cost basis
of the Company’s equity investments. The ECL reserve as at year-end was £6.4 million on all the Company’s debt investments.
During the year, certain debt investment maturities were extended to reflect changes in the circumstances of the particular investment or the
prevailing market conditions in order to preserve value for the Shareholders, as contemplated and disclosed in the General Meeting Circular.
The Portfolio of Contractual Maturities table disclosures reflect those changes in maturities.
Capital Return Mechanism
As noted last month, the Company is awaiting a definitive response from HM Revenue & Customs, which will allow it to publish details of the
capital return, and the Board hopes to be able to do so in the near future. In the meantime, as noted, the Company has reduced the ongoing
borrowing costs.
Current yield 14%
Discount to NAV 33%
Dividend decision due next week ?
Market waiting on the update of the timetable for the
return of capital.
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