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P2P Global returns fall short of target

The first six months of 2016 was a disappointing period for investors in P2P Global Investments as its share price fell from 1007p to 850p. They paid a total dividend of 25.2p per ordinary share during the period and delivered a NAV return of 2.37%. The Board recognises that investment returns in the first half of 2016 were below the required run rate to achieve their target dividend return of 6-8% on NAV for the full year. However, the Board currently expects to achieve the target dividend yield run rate as market conditions normalise and the portfolio reaches its full deployment.

During the first half of 2016 both Lending Club and Prosper raised the average interest rates offered to their borrowers across the entire risk spectrum of loans, including the higher quality grades that are primarily owned by the fund. P2P Global suffered from an immediate non-cash, mark-to-model valuation reduction on existing Lending Club loans held by Eaglewood Income Fund I, in which the fund is invested. The impact of this valuation adjustment was – 18 bps of NAV in Q2, and barring any further rate changes at Lending Club, represents a one-off occurrence. The Investment Manager reiterates that this valuation adjustment does not reflect a deterioration in the credit performance of the existing book of loans, but rather reflects the change in the interest rate structure for new loans of similar credit quality.

At 30 June the discount on the fund was 16.0% and today it stands at 17.0%. During Q2 2016 they bought back 237,205 shares at an average price of 826.6p, creating an uplift of 0.5p per share for shareholders. In July 2016, the Investment Manager, with the approval of the Directors, bought back an additional 343,769 shares at an average price of 828.8p, creating an uplift of 0.7p per share for shareholders.

P2P : P2P Global returns fall short of target

 

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