Ranger Direct Lending Fund will not be progressing with its planned C Share issue.
When the Funding Circle SME Income Fund successfully closed a £150m IPO yesterday, we wondered aloud whether this signaled a shift in investor appetite. A shift away from the more leveraged, alpha-hungry investment trusts, and towards the lightly leveraged, low fee, passive fund structures – structures that are directly linked to an individual marketplace lending platform. The result of Ranger Direct Lending’s attempted C Share issue appears to at least partially corroborate that suspicion.
Ranger – which announced a little over a fortnight ago that it would attempt to raise £135m in a C Share issue – has called off the fundraise. Ranger initially raised £135m through an IPO on the London Stock Exchange in May, and has enjoyed strong net returns to date, which are reportedly in line with its 12% to 13% target. A London Stock Exchange update on the recent C Share issue suggests that the company “looks forward to providing its shareholders with progressively higher dividends as it achieves full deployment of its capital”.
Victory Park Capital’s Specialty Lending Investments recently closed a C Share offering, raising £183m after having initially targeted “at least” £200m. The last C Share offer to hit its target was a P2PGI round in July, which ultimately pulled in £400m after originally announcing that the issue would target “in excess of £250m”. There are no further planned C Share raises on the horizon. There is, however, the IPO of the LendInvest fund to look out for.
It is worth noting though that Ranger's defined remit is the world of "direct lending", as distinct from "marketplace lending". The vehicle channels money through the likes of Biz2Credit, Interface Financial Group and Capify. The cancellation of Ranger's C Share issue may simply be a sign that investor demand is weighted more heavily towards the marketplace lending asset class.
Whilst the Ranger fund will not be progressing with the C Share issue at this stage, the possibility of re-launching the issue at a subsequent date has not been ruled out. Bill Kassul, Partner in the Ranger Direct Lending Fund, commented:
"We met with our investors this past week and we heard consistently that they are very pleased with our investment strategy, one that continues to produce net returns of 12%-13% to the RDL fund, with loans that are both secured against assets and have short durations. This positive investor sentiment is reflected in our stock price which continues to trade at a premium. The timing of the year along with the large amounts of capital already raised through us and our peers led to the decision not to progress the c-share. This has no bearing on our ability to continue to deliver returns on our shareholders' capital."
21 March 2023
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