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RM Secured Direct Lending confident on delivering sustainable income and returns for shareholders

Snapshot

  • £102mln of investments across 35 loans
  • Dividend yield of about 6.5%
  • Trust shifting investment stance towards non-cyclical sectors
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Quick facts: RM Secured Direct Lending

Price: 98.33 GBX

LSE:RMDL
Market: LSE
Market Cap: £120.18 m
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We remain confident in our investment manager's approach in ensuring the portfolio is well balanced and set to deliver sustainable income and returns for shareholders

Norman Crighton, chairman

What RM Secured Direct Lending does

RM Secured Direct Lending PLC (LON:RMDL) is a UK-based closed-ended investment trust focused on secured debt.  

The company aims to generate attractive and regular dividends through loans sourced or originated by its asset management arm, RM Capital Markets Limited, with a degree of inflation protection through index-linked returns where appropriate.

The loans the company invests in are mainly secured against such assets as real estate, plant and machine or income streams like account receivables.

What it owns

The group owns RM Capital Markets Limited, which provides advisory, capital raising and risk management services, a direct lending platform, and currency and fixed income trading services.

Within RM Capital Markets is credit asset management business, RM Funds, a fixed-income specialist with a focus on secured lending and debt investments.

RM Secured Direct Lending has the VT RM Alternative Income Fund, which invests primarily in listed equities within the alternative income sector, including real estate investment trusts and other trusts in areas such as asset lending, direct lending, peer-to-peer lending, infrastructure debt and equity, property, structured credit investments and renewables.

Inflection points:

  • The investment trust's net asset value per share ended the half-year at 98p, up from 96.96p at the end of December.
  • Gross assets grew to £124.3mln by the end of June from £106.9mln at the end of December, as the portfolio grew 20% from the end of December to £122m.
  • The portfolio grew 20% to £124.3mln and the average investment size increased 17% to £122mln, with 35 debt investments, up from last year's 23 in 2017, while the number of sectors widened to 14 from 11.
  • RM paid a total dividend of 6.5p per share in 2018 and aims to increase the payout this year.
  • Since the start of the 2019 fiscal year, RM has made five new investments including in two hotel brands, Praetura Commercial Finance, the invoice discounting sector and a business that installs boilers for energy efficiency in homes.

What the chairman says

Norman Crighton, chairman of the company, said: "RMDL continues its track record of sourcing strong credit opportunities and actively deploying funds into high quality investments. We remain confident in our investment manager's approach in ensuring the portfolio is well balanced and set to deliver sustainable income and returns for shareholders."

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What analysts think

Analysts at Hardman & Co Research said: “RM Secured Direct Lending offers investors an ongoing 6.5% dividend yield, whose sustainability is supported by multi-year assets, a rising revenue yield and economies of scale.

“Credit, we believe, is well controlled, and we provide readers with a detailed review of its assessment, monitoring and recovery.”

The analysts added that it thinks the company’s gearing level is appropriate, the investment manager's interests are aligned to shareholders, and that any discount will be actively managed.

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RM Secured Direct Lending eyes raising on the back of strong YTD performance

RM Secured Direct Lending (LON:RMDL) tells Proactive London that strong year to date figures mean it's seeking to raise up to £10mln from City institutions to continue investing in its “strong pipeline”. Head of Sourcing and Origination Pietro NIcholls is keen to underline the company's 'steady...

on 18/10/19

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