ICG Longbow headed for the exit – ICG-Longbow Senior Secured UK Property Debt Investments’ board has decided to recommend to shareholders that the investment objective and policy of the company are amended so that it can pursue a strategy of orderly realisation and the return of capital over time to shareholders.
The board says that “the underlying performance of the portfolio has proved resilient and defensive through the pandemic, with no impairments, enabling the company to deliver a fully covered dividend to shareholders in September 2020. The board’s focus is, however, on continuing to maximise shareholder value and it therefore believes that given the current economic backdrop and re-rating of the sector, an orderly realisation is the most prudent option.”
The proposal needs to be approved by shareholders and therefore the next step will be to convene a meeting. Even if shareholders approve this, it will take some time to run off/sell the portfolio and so the announcement cautions that “the orderly realisation strategy would not result in the liquidation of the company in the immediate future or require the company to dispose of assets within a defined time frame.” The shares will still be listed while the winddown is ongoing.
[Ahead of this announcement, ICG Longbow’s shares were trading on a 21.5% discount. However its historic returns, while not exciting, still look OK to us (just less than 5% per year). This feels like a reflection on the prospects for the property market. As at 31 July 2020, the portfolio comprised 11 loans with an aggregate principal balance of £120.7m. The spread of property types being lent against was fairly broad, with reasonably low exposure to retail (nothing direct but 25% exposure to mixed use developments) plus 10% to hotels.]
LBOW : ICG Longbow headed for the exit