TIDMGABI TIDMGABC
RNS Number : 8892S
GCP Asset Backed Income Fund Ltd
19 July 2022
19 July 2022
GCP Asset Backed Income Fund Limited
(the "Company" or "GCP Asset Backed")
LEI: 213800FBBZCQMP73A815
Net asset value and investment update
GCP Asset Backed, which invests in asset backed loans, announces
that, at 30 June 2022, the unaudited net asset value ("NAV") per
ordinary share of the Company (including current period revenue) is
98.45 pence per share.
NAV
The NAV performance for the 3 month period is a negative
movement of 0.91 pence per share after the payment of dividends, a
decrease of 0.92% per cent.
The negative NAV performance for the period was driven by
valuation adjustments to the Company's loan to the co-living group
(the "Co-living Group Loan") as described below.
Portfolio update
The Company currently has exposure to 59 loans across 22
sectors. Overall, the portfolio continues to perform well, and the
Investment Manager remains satisfied with the mix and quality of
investments within the portfolio.
The Company continues to experience repayment of capital, with a
further GBP9.5 million of principal returned in the period. Its
first football finance loan repaid in full, with the Company
receiving additional prepayment fees. The Investment Manager
believes that this is an attractive sector and, whilst not
currently looking to increase the Company's overall exposure, the
Investment Manager is looking to complete follow-on transactions as
funds are repaid.
The Company's remaining battery storage project repaid in full
in the period, generating additional income through prepayment
fees. Battery storage has been a strong sector for the Company,
with all loans repaying early and benefiting from fee uplifts.
The only assets in the portfolio that are categorised as high
risk are the Co-living Group Loan and the two community facility
loans, as described below.
The Co-living Group Loan
At 30 June 2022, given the continuing uncertainty surrounding
the realisation value of the Co-living Group Loan, the Directors,
having taken advice from the Company's valuation agent and
Investment Manager, have considered a range of values, resulting in
an impact ranging from a low of negative 1.53 pence per share to a
high of positive 0.25 pence per share on the NAV of the Company.
Consistent with the Board's historical preference for prudence, the
Directors have decided to value the Co-living Group Loan at 30 June
2022 at the lower end of this valuation range, resulting in a
negative NAV movement of 1.21 pence per share.
This decision was based upon a number of developments in the
period which have altered the valuation range from what was
previously considered a prudent position. The Investment Manager is
working to resolve a number of these positions in a way which
mitigates the impact to the Company.
Community facilities
The Company has provided loans to two community facilities,
which house a variety of small businesses including bars, food
outlets, co-working, studios and workshop space.
The first community facility remains near fully occupied and
work is underway to further enhance the building, including letting
the unused basement.
The second community facility has performed well in the period.
The opening of the outside garden space at this facility, as noted
at the end of the last quarter, has had a positive impact on the
site. Further spaces are looking to be activated with discussions
advancing on the last remaining units to be let.
The Investment Manager remains confident that these are strong
assets with borrowers which should be well placed to repay their
respective loans. We anticipate that the adjustments taken against
these loans will be kept in place until the assets are fully
stabilised and able to demonstrate a period of sustained
performance.
The Investment Manager continues to work closely with the
management team to support improvements at these assets.
Dividends
On 29 April 2022, the Company announced an increased quarterly
dividend in line with its new dividend target for the year of
6.325p. It declared a quarterly dividend in respect of the period
from 1 January 2022 to 31 March 2022 of 1.58125p per share, which
was paid on 14 June 2022.
Outlook
Market volatility and economic uncertainty are continuing to
increase as a result of high inflation, interest rate concerns and
the impact of the Russian invasion of Ukraine on energy prices and
supply chains. Whilst we note the impact that this is having on the
Company's share price, the Investment Manager is pleased to report
that the portfolio as a whole remains resilient. The Investment
Manager continues to focus on lending in known sectors and
borrowers, based on their performance during the pandemic and
throughout the life of the Company. The Investment Manager believes
that the continued repayments and deployment into new and
attractive sectors demonstrates the robustness of the
portfolio.
The Investment Manager continues to liaise with the Company's
borrowers on a regular basis to assess the impact of inflation,
power prices and staffing on their businesses, noting that a number
of borrowers may benefit from an inflationary environment given the
nature of their business models.
The Investment Manager continues to apply its measured approach
to investing and is aiming to resolve the workout process of the
Co-living Group Loan in a manner which will maximise recovery for
the Company.
The Investment Manager will be holding a webinar on Wednesday 27
July 2022 at 10.00am to provide more detail on the portfolio. For
any investor interested in joining, please e-mail
zoe.french@graviscapital.com .
For further information, please contact:
Gravis Capital Management Ltd +44 (0)20 3405 8500
David Conlon
Joanne Fisk
Investec Bank plc +44 (0)20 7597 4000
Helen Goldsmith
Denis Flanagan
Neil Brierley
Buchanan/Quill +44 (0)20 7466 5000
Helen Tarbet
Sarah Gibbons-Cook
Henry Wilson
Notes to Editors
GCP Asset Backed is a closed ended investment company traded on
the Main Market of the London Stock Exchange. Its investment
objective is to generate attractive risk-adjusted returns primarily
through regular, growing distributions and modest capital
appreciation over the long term.
The Group seeks to meet its investment objective by making
investments in a diversified portfolio of predominantly UK based
asset backed loans which are secured against contracted,
predictable medium to long term cash flows and/or physical
assets.
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END
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