GCP Asset Backed Income Fund (GABI) announced its annual report for the year end 31 December 2023. The company delivered a NAV total return of 5%, although the share price total return was -14.1%, leading to a large increase in the discount which now sits at 27%. The company did announce profits of £18.3 million for the year, while it also completed the repayment of its £50.0m revolving credit facility following the early prepayment of loans.
Post year end in March 2024, following extensive shareholder consultation, the company announced the results of its strategic review with the board concluding that shareholder value will be best served by winding down the company with an orderly realisation of its assets and return of capital. Shareholders will be given the opportunity to vote on the discontinuation of the company at the forthcoming AGM (in respect of which, see below).
Commenting on the results, chairman Alex Ohlsson noted:
“Against a wider market background of economic uncertainty and volatility, the company continues to offer investors exposure to a diversified portfolio of secured loans. At the year end of 31 December 2023, the Group held 42 loans with a fair valuation of £362.8 million and principal balance of £374.6 million invested across the property, social infrastructure, energy and asset finance sectors.”
The company also announced a Q1 update highlighting that the NAV fell 2.1% over the 3 months to 31 March predominantly as a result of impairments and provisions proposed by the company’s independent valuation agent.
The company also announced details regarding the orderly realisation of its assets, which is outlined below.
“At the 2024 AGM, shareholders will be given the opportunity to vote on the discontinuation of the Company which will be presented as an ordinary resolution requiring the majority of those voting to vote in favour of discontinuation in order for the resolution to pass (the “Discontinuation Vote”). The Board has recommended that shareholders vote for discontinuation of the Company in its present form at the 2024 AGM.
“In addition, subject to the approval by shareholders of the Discontinuation Vote, the Board intends to convene an EGM to be held immediately after the 2024 AGM at which it will seek shareholder approval for certain resolutions required to facilitate the Orderly Realisation (the “Proposals”).
“Subject to the Proposals being approved by shareholders, it is the Board’s expectation that the Company will make a capital distribution of at least £55.0 million as soon as is reasonably practicable following the conclusion of the 2024 EGM. The Board will also seek to expedite capital distributions when practicable thereafter.
“The Orderly Realisation will not result in a liquidation of the Company in the immediate future and the Board will seek to implement the Orderly Realisation in a manner that maximises value for shareholders.
“Amounts realised are expected to come from contractual repayments by borrowers to the Company as loans mature in accordance with their contractual terms, and from the disposal of portfolio assets, including longer-dated loans.
“Should the Proposals be approved by shareholders, it is the Board’s intention to maintain the Company’s existing level of dividend of 6.235 pence per annum whilst the Company remains substantially invested, for as long as practicable. This is a target only and does not constitute a profit forecast.
“The EGM Circular being published on or around 2 May 2024 will contain further information, including an updated portfolio repayment profile at 31 March 2024.”