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RM Secured Direct Lending eyeing strong pipeline of opportunities

In the fourth quarter, the proportion of the portfolio linked to interest rates rose from 22% to 39% and these investments are expected to see an increase in returns

Pound coin on a graph
The investment manager does not seem too fussed by the recent interest rate hike

Secured debt-focused investment trust RM Secured Direct Lending PLC (LON:RDML) saw its net asset value per share rise 0.23p to 98.59p in December.

The shares currently trade at 102.15p, down 0.35p on the day.

The portfolio has grown to 24 debt investments across 13 sectors with £93mln of commitments across the trust’s ordinary and C share classes, of which roughly £70mln has been deployed on a cash basis. 

Around three-quarters of the portfolio is in higher-yielding private bi-lateral or private club investments with the remainder in more liquid public debt transactions.

RM said the portfolio is well positioned to withstand the increase in the Bank of England’s interest rate from 0.25% to 0.5% and any other rate rises that might be in the pipeline.

READ RM Secured Direct Lending’s monthly factsheet

The trust’s investment manager, RM Capital Markets, continued to grow the portfolio of secured debt investments at the end of the year, with significant progress made in deploying the £30mln raised in October 2017 through the issue of C shares. 

Currently, £22mln has been committed, of which £15mln has been drawn down. The investment manager expects the proceeds will be fully deployed on a cash basis by the end of February.

The company has also signed a revolving credit facility (RCF) of £10mln that will give it additional firepower, and it expects to start drawing down these funds in February or March.

"This has been a busy quarter for the company,” declared James Robson, the chief investment officer of RM Capital Markets.

“We have made swift progress in identifying a strong pipeline of opportunities that meet the company's yield targets and risk profiles. The portfolio is well balanced with good diversity across a number of attractive sectors and established businesses, supported by strong security packages,” Robson said.

“We will maintain this momentum and the quality of the portfolio by continuing to invest in further high yielding secured lending opportunities, using the additional capacity from our RCF with OakNorth."

Quick facts: RM Secured Direct Lending

Price: 100.88 GBX

LSE:RMDL
Market: LSE
Market Cap: £113.21 m
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