Volta Finance Limited has published its results for the financial year ended 31 July 2016. Volta produced a total return of 3.8% in NAV terms. This has been accompanied by a narrowing of the discount of the share price to NAV from nearly 20% at the half-year point to less than 14% at the end of July, such that the return to shareholders in the second half was 18.2%. Volta was paying semi-annual dividends, its first quarterly dividend, of 15 cents per share, was paid on 27 September 2016. Given the growing representation of UK investors on the shareholder register, the company has also announced that it will pay dividends in either euros or, if shareholders so elect, in the equivalent amount of sterling.
The manager says the performance could be compared with the performance of the US loan market (S&P LSTA Index) at 2.4% or with that of the European loan market (S&P ELLI Index) at 1.7%, for the same period, although Volta targets significantly higher returns than those provided by these markets. The relatively modest performance is attributed to some price declines in USD CLO debt and equity.
During the annual period, the assets continued to produce significant cash flows (net of Repo costs) of €33.8 million or 11.7% of the end of period NAV. The manager sold assets valued for a total of €41.5 million (at an average yield of 5.6%) and purchased assets to the value of €117.3 million (with a projected yield at purchase of 11.0%) – 14 CLO Debt, seven CLO Equity, four Bank Balance Sheet transactions, two ABS Debt assets, two ABS Residual assets and one CLO Warehouse.
As at the end of July, the projected IRR of Volta’s assets, including the $45.0 million repurchase facility that was initially put in place in March 2015 for $30.0 million and further increased by $15.0 million to $45.0 million in September 2015, was 10.3%. Relative to a share price in the area of €7, the gross projected return on Volta’s shares is close to 11.5%.
VTA : Volta positions itself for 11.5% returns