Honeycomb fund looks to new £400m cash raise

The closed-ended fund has announced a huge potential cash raise amid a sustained period of consistent returns.

The £608m Honeycomb investment trust has announced a new share placing programme to raise up to £400m over the next year, according to a market update.

In its prospectus for the placing programme the firm says that it will issue up to 40 million ordinary shares as part of the cash raise. Its current share price is £11.39. Honeycomb, a strong performer in the alternative credit closed-ended fund world, last raised cash in April 2018 when it raised £100m. The round was substantially oversubscribed, Honeycomb said at the time.

This follows a strong run for the fund in 2018 with its NAV 0.65 per cent in the month of November, following returns of 7.8 per cent and 9.1 per cent in 2016 and 2017. As a result the fund has consistently traded at a premium to net asset value of 11.9 per cent.

Pollen Street Capital, the manager of the fund, says that it is seeing ongoing strong performance from its underlying portfolio and that it has a high allocation to loans with either downside protection or loans with significant seasoning.

Liberum’s analysts said: ”The company continues to deliver steady monthly returns and has significantly outperformed the sector since launch. This has been driven by superior credit performance."

Honeycomb has also been increasing leverage steadily over the past year with a currenty debt to equity ratio nearing 50 per cent of assets and has also been upping its exposure to SME loans.