Pollen Street Secured Lending fund teases 25% dividend hike, but later backtracks

The investment trust saw a change to its name in 2019, as well as a near completion of its portfolio-shift away from marketplace loans but it is yet to fully restore its targeted income payout.

The manager of the Pollen Street Secured Lending fund, formerly called Peer-to-Peer Global Investments, has suggested that it will recommend to its board to increase its quarterly dividend to 15p, a level not seen since 2016.

The news was announced via the fund’s monthly factsheet yesterday but a later statement by the listed fund’s board to the stock market clarified that no decision had been made. The original factsheet appears to have later been taken down.

The second statement said: “The Board wishes to clarify that no decision as to the level of dividends (including for the final quarter of 2019) has yet been made by the Board. Until such decision has been taken, there can be no guarantee that there will be any change to the Company's current dividend policy and the Company will make a further announcement in due course.”

Analysts at Liberum said a dividend increase to the targeted 15p would demonstrate improvement in portfolio performance since the change in investment strategy at the end of 2017 and that the underlying income from the continuing portfolio has steadily improved since the start of 2018. 

“This has been achieved with significantly lower leverage. The company's overall performance has shown some volatility as a result of write-downs relating to the legacy assets. The reduction of the run-off assets to 7 per cent of the portfolio should minimise its potential future impact. We expect the dividend uplift will help to narrow the discount to NAV and we believe there is scope for further growth over the medium term as the drag from legacy and equity assets declines,” Liberum said. 

The fund says it saw seven new structured facilities completed in Q4 2019, reinvesting the proceeds from its sale of the Castlehaven portfolio whilst a portfolio of non-performing loans was also sold at a slight premium. The debt to equity ratio remains relatively low at 35 per cent with the manager expects this to rise in 2020 to c.50 per cent.