Secured debt-focused investment trust RM Secured Direct Lending PLC (LON:RMDL) had a strong finish to 2017 and has kept up the momentum so far this year.
Its net asset value rose to 99.26p at the end of January from 98.59p in December as it continued to grow its portfolio of secured debt investments.
The company said January was an active month with one new investment, two loan pre-payments with associated pre-payment fees, two drawdowns against existing facilities and one divestment.
In March it announced plans to raise further capital by placing some zero dividend preference (ZDP) shares at 100p a pop. The group is also pushing ahead with plans to issue “C” shares at the same price.
"We have seen excellent momentum since we launched in 2016. We have raised and deployed funds quickly, including our most recent C Share issue, into attractive assets that meet our strict investment criteria,” said James Robson, the chief investment officer of RM Funds.
“We have also exceeded our first year target return of 4% and remain on track to increase this to 6.5% for 2018."
The company also signed a £10mln revolving credit facility with OakNorth in November, which gave it more firepower to fund its prospective investments.
Portfolio continues to grow
In its annual results, the company revealed it held 23 debt investments totalling over £55mln of deployed capital as well as holding nine debt investments in its "C" Share portfolio, totalling £21mln.
“The board is delighted to have the broad sector diversity which was one of the initial objectives of the company,” it said in a statement.
“Investments are spread across 13 sectors with the average yield on investments being 8.23% on the ordinary shares and 9.74% on the C shares.”
The company declared 4.2p per share of dividends for the year, which was above the 4p per share target set at the time of the IPO.
Strong pipeline of opportunities
RM Capital Markets is particularly keen on two sectors: Property Bridging and Asset Finance.
Property Bridging is where loans are made on a very limited loan-to-value basis over property in circumstances where a bank cannot cough up the money quickly enough. RM believes it can fill this gap within the unregulated space by providing the "bridge" and adds value by conducting the due diligence and legal process within an expedited time period.
Funding Asset Finance opportunities are attractive due to recourse to a wide pool of hard assets, guarantees from underlying borrowers and significant sponsor equity, RM Capital said.
“We continue to see a number of bespoke, higher-yielding lending opportunities to established businesses that offer attractive returns profiles across a number of sectors," Robson said.