SQN Asset Finance has published its first annual report covering the period from launch in July 2014 to the end of June 2015. At the end of June SQN had a market cap of £193.3m, assets of £178.9m, an NAV per share of 99.93p and had paid dividends totalling 4.28p. The share price at the end of the period was 107.75p.
The weighted average yield on their portfolio they reckon is at least 9.5% and the weighted average term of the loans they have made is 72.3 months – a little over 6 years.
Within the portfolio, there is some exposure to falling oil prices as they have led some money (less than 3.5% of the portfolio) to vessels that support the offshore oil industry (the focus of Nimrod Sea Assets). They say these vessels can have alternative uses but rates achieved should reflect the overcapacity in the industry at the moment. they also have some exposure to renewable energy assets and intend to increase this in future. Some projects will have been affected by recent changes to government subsidies but the statement says that existing investments are not impacted and future investments will we written on the same risk / reward basis as before.
The report gives much information on the portfolio which we won’t reproduce here – you’ll be able to read it soon via our company page, accessed by clicking the link above.
They say that : “Overall we as Investment Managers are very pleased with the portfolio that is being constructed. The average yield on investments is higher than we had initially targeted, without any compromise in credit quality. The portfolio has turned over short dated US Dollar denominated investments for longer term Sterling denominated opportunities as anticipated, while at the same time reducing its exposure to residual values to less than 3.5%. Earnings have ramped up sufficiently to sustain monthly dividends at an annual rate of 7.25%. The pipeline remains robust, outstripping the capital raised during the IPO and subsequent placing programme. At this time, we do not foresee any changes in market dynamics that would affect our ability to continue to profitably deploy capital in our specialist segment of equipment lease and asset financing opportunities in the £1m to £20m range.”
This has convinced them to proceed with a £180m open offer and placing – existing shareholders will be allowed to apply for one new C share for every 2 ordinary shares they hold. A prospectus will be published shortly.
SQN launches £180m fund raise on back of annual results