GLI Alternative Finance plc announces that it has posted a circular convening a general meeting of the Company at which it will be proposed that certain changes are made to the investment restrictions of the Company. The Proposals are subject to approval by shareholders of the Company at the General Meeting.
Upon launch in September 2015, the Company had the objective to provide Shareholders with attractive risk adjusted returns through investment, principally via the Investee Platforms, in a range of SME loan assets, diversified by way of asset class, geography and location.
In focusing on bringing investors exposure to high quality alternative finance SME loans, there have been several occasions where the Company’s investment manager, Amberton Asset Management Limited, has been presented with loan opportunities in which the Company has been unable to participate due to a potential breach of the Company’s maximum exposure to an individual issuer.
Under the current investment restrictions, this maximum exposure is one per cent. of the gross assets of the Company in respect of investments outside of the Company’s top ten holdings by weight. Many platforms do not offer “co-lend” facilities by which investors can purchase fractions of a loan, and in such cases the loans have been withdrawn from offer to the Company. The directors of the Company are proposing that this limit be increased in order to allow the Company to have greater specific loan risk where the Manager determines it to be appropriate. It is anticipated that the change will lead to an asset allocation skewed towards better quality loans, giving the Manager the flexibility to pursue a strategy of increasing the credit quality within the Company’s portfolio.
The current investment restrictions require the Manager to invest at least 10 per cent. of the Company’s Gross Assets in each stated category of loans by duration to maturity, being loans with a duration to maturity of up to 6 months, of between 6 months and 18 months, of between 18 months and three years, and greater than three years. The Directors have determined that having a firm restriction to this effect is not consistent with the objective of the Company to provide Shareholders with attractive risk adjusted returns from diversified loans. Accordingly, the Directors are proposing to remove the requirement that the Company invests at least 10 per cent. of its Gross Assets in each category of loans with a duration to maturity greater than 6 months and that the minimum exposure to assets with a duration to maturity of 0 to 6 months be increased to 20 per cent. of Gross Assets.
The following changes are being proposed to the investment restrictions applicable to the Company:
- To increase the limit for individual credit risk from one per cent. to two per cent. of Gross Assets
- The Company’s investment restrictions contain limits on the amount that can be lent to an individual issuer. Within the Company’s top ten holdings by weight, the limit is 2.5 per cent. of Gross Assets, and outside of the top ten this limit is one per cent. of Gross Assets. The proposed change is to increase the Company’s maximum exposure to an individual issuer for loans outside of the Company’s top ten holdings from one per cent. to two per cent. of Gross Assets.
- To increase the minimum exposure to loans of a duration of zero to six months to maturity from 10 per cent. to 20 per cent. of Gross Assets and remove the minimum exposure to loans of all other durations
The current investment restrictions stipulate that the following limits should be observed in relation to the allocation of the Portfolio by loan duration:
Duration to maturity Minimum percentage Maximum percentage
of Gross Assets of Gross Assets
0 to 6 months 10 per cent. 40 per cent.
6 months to 18 10 per cent. 40 per cent.
months
18 months to 3 10 per cent. 40 per cent.
years
Greater than 3 10 per cent. 40 per cent.
years
The proposed new restrictions are:
Duration to maturity Minimum percentage Maximum percentage
of Gross Assets of Gross Assets
0 to 6 months 20 per cent. N/A
6 months to 18 N/A 40 per cent.
months
18 months to 3 N/A 40 per cent.
years
Greater than 3 N/A 40 per cent.
years
GLAF : GLI Alternative Finance proposed changes to investment restrictions