Ranger Direct Lending announces largest ever dividend

By Daniel Lanyon on Thursday 25 August 2016

Alternative Lending

Investors will be pleased to note a further jump in the dividend for this closed-ended direct lending fund.

The Ranger Direct Lending Fund has announced a dividend per share of 26.87p, its fourth quarterly pay-out since launching last year.

The investment trust was launched in May 2015. This latest dividend comes after its fourteenth consecutive month of positive returns in its net asset value (nav). It will be paid on 16 September. Its current yeild is 9.4 per cent.

According to AltFi data, Ranger Direct Lending initially underperformed the broader UK marketplace lending space, as measured by the Liberum AltFi Returns index in its twelve months but it has since come roaring back and is now some way ahead.

NAV Performance of RDL vs  LARI index since launch

Source: AltFi Data

The recently made moves towards applying leverage and to diversify its capital base by raising £30m through a placing of zero dividend preference shares on 1 August 2016. The shares were issued with a 5 year term and a gross redemption yield of 5 per cent per annum.

The £174m Ranger Direct Lending fund has also seen its share price rally in recent weeks, partly as a result of its high dollar exposure which - post Brexit -  has meant sterling investors have seen a boost from the currency exposure alone.

Just before the Brexit vote its share price was at 975p, today it is just under 1100p. Of course this doesn’t include movements in its discount or net asset value or dividends paid out.

 Share Price of Ranger Direct Lending since Brexit

Source: Google

Ranger Direct Lending is a portfolio of mostly loans that are asset backed. They lend to SMEs but they take collateral either company equipment or buildings or directors' guarantees, which arguably gives better protection if there is default.

Loans are typically secured, have short duration and are high yielding. The fund managers can also take equity stakes in platforms or other companies serving the direct lending industry.

The fund, which is managed by Jack Antonini, Kenneth Scott Canon, Mark Dawson, William Kassul, Wes McKnight, Gary Melara, is on a discount of 6.7 per cent.

Ranger belongs to the cadre of investment trusts listed on the London market include the likes of the £868m P2P Global Investments, VPC Specialty Lending, Funding Circle SME Income, Honeycomb and GLI Alternative Finance.

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