VPC Specialty Lending VSL

[88V8]

This small trust has paid a very nice divi, nearing 10%.
Unfortunately it holds a few unlisteds and persistently trades at a discount, currently 17%, and is yet another Trust in danger of falling prey to opportunistic calls for wind-up.

There will be an AGM on 31st March, and as per this RNS the proposal will be voted.

Tipped in Questor last Friday, unfortunately this is only likely to attract speculators in search of a fast buck.
Anyway, I just tripled my holding and will vote against the motion.

At the very least it should return a decent divi during wind-down, and hopefully a capital gain but I would much prefer that it continue.

V8

[yieldhog]

Posted by V8 back in January.

This small trust has paid a very nice divi, nearing 10%.
Unfortunately it holds a few unlisteds and persistently trades at a discount, currently 17%, and is yet another Trust in danger of falling prey to opportunistic calls for wind-up.

There will be an AGM on 31st March, and as per this RNS the proposal will be voted.

Tipped in Questor last Friday, unfortunately this is only likely to attract speculators in search of a fast buck.
Anyway, I just tripled my holding and will vote against the motion.

At the very least it should return a decent divi during wind-down, and hopefully a capital gain but I would much prefer that it continue.

V8

Has this been approved ?
I note there are more items to be voted on shortly but have not yet got all the details. Does anyone know where we currently stand?
I own some and voted against winding up as far as I remember.

Y

[DavidM13]

It has been approved. https://www.theaic.co.uk/companydata/vp ... nts/415447 is the confirmation and this one has the details https://www.theaic.co.uk/companydata/vp ... nts/405373

[yieldhog]

VSL Specialty Lending.
This trust is currently in wind-up mode which is expected to take 3-5 years.
Average life of the portfolio is estimated at 14 months.
Current NAV is estimated at 95.22 and latest actual NAV at 96. Market price is 72 - 73.
The first pay-out from the winding up is expected late 2023 to early 2024.
Yield is currently almost 11%.

The big risk is that higher interest rates and a recession will lead to some defaults in the Trust portfolio. There will also be a reduction in liquidity in the market for the fund as it winds down.
On the other hand, if rates are at or near their peak we may see some stabilization of the NAV at or even above the current level.

At the current price that's a compound interest return over 5-years of over 70% and potential capital gain of over 30%. In other words, double your money in five years.
I own some of these at 92 and am inclined to round up my holding at current levels.

Y

[88V8]

Current NAV is estimated at 95.22 and latest actual NAV at 96. Market price is 72 - 73.
Yield is currently almost 11%.
At the current price that's a compound interest return over 5-years of over 70% and potential capital gain of over 30%. In other words, double your money in five years.
I own some of these at 92 and am inclined to round up my holding at current levels.

Yes it is tempting.
The question is the unlisteds, where NAVs tend to be finger in the air.
And as it winds down so will the dividend.
It's about 6% of my IT portfolio, and I think I'll leave it there.

V8

[yieldhog]

Hi V8,

I agree the dividend in absolute terms will need to fall, but will it necessarily fall as a percentage of the funds remaining?
It depends on how the winding up is managed. Will they sell the more liquid positions first or take their time and sell the difficult positions first? With such a short duration, you would expect quite a lot of natural runoff within a year or two, so I'm a bit surprised it would take as long as five years to complete a winding up. Maybe we'll get some iea from any updates they provide.

Y