NB: one important disclosure – James Carthew, the author of this post, is a director of GLIF.
GLIF’s Net asset value at the end of December fell to 50p from 51.8p at the end of September 2013 – mainly down to a fall in the value of GLIF’s US$ denominated CLO investments.
A number of significant strategic initiatives have been announced. These will, in time, transform the underlying nature of GLIF’s business but the central focus will still be on lending to small and medium enterprises (SMEs). GLIF has stated that, once the transformation of its operations is complete, it expects to generate comparable long-term returns to those of its existing business and GLIF is committed to it current dividend policy.
News – for the existing business:
The CLO portfolio, managed by GMB Partners, is being spun off into a separate fund and work is underway to determine whether there is sufficient demand to justify a fund raising for that vehicle.
BMS Finance was successful in its application for £15m of funding from the government’s Business Bank.
FundingKnight’s SME (small and medium enterprise) business is growing fast – it had lent 33.5m by the end of December compared with £1m when GLIF bought its stake in July 2013. the growth was, in part, achieved by increasing the maximum size of its loans from £100,000 to £150,000. GLIF has over £1m through the platform.
Platform Black’s invoice discounting business traded over £36.5m in 2013 and the average transaction size has been rising and the interest cost for borrowers has ben falling. GLIF lent £163,000 through the platform, generating an IRR of 13%.
Lombardia Capital Partners, a US fund manager, swapped the warrant it issued to GLIF for a $795,000 loan (representing a 60% gain over cost for GLIF on this warrant) and repaid $1.1m of its outstanding debt to GLIF
In addition to the above, GLIF has announced a series of partnerships with new lending platforms:
TradeRiver Finance provides trade finance to companies and has been growing quite quickly in recent months. GLIF is taking a 10% equity stake (for £800,000) and providing a £2m borrowing facility to TradeRiver
GLIF has invested $1.5m in a US SME lending business, Raiseworks, for a 30% equity stake.
GLIF has formed a joint venture with a German company, CRX, to launch a UK version of its German SME lending business, Finpoint. GLIF will own 75% of Finpoint UK in exchange for investing £1.25m in the venture. Finpoint is slightly different to other lenders in that its loans are financed by financial institutions.
GLIF has bought a 7.4% stake in Sancus – an offshore peer-to-peer lending business with a target client list of high net worth individuals, entrepreneurs and professional investors.
GLIF will invest to take a 5% stake in the European Receivables Exchange (Dansk Faktura Børs) an invoice discounting business that has a different customer base (by virtue of its location) and slightly different operational model from Platform Black.
GLIF is investing £1m in Proplend, taking a 22.5% equity stake in this lender operating in the commercial property market.
and, finally, GLIF is taking a 26% equity stake in CrowdShed – a business established to support a variety of crowd funding opportunities.