GCP Asset Backed Income (GABI) has published its results for the year ended 31 December 2024, marking a year of significant progress in its managed wind-down strategy. Following shareholder approval in May 2024, the company amended its investment policy to focus on an orderly realisation of assets and the return of capital to investors.
During the year, GABI returned £188.2m to shareholders via two compulsory redemptions—representing over 67% of the company’s market cap at the start of the year. A total of 210m shares were redeemed, and the company also cancelled 16.4m treasury shares. The portfolio saw £166.5m of loan repayments, delivering an average internal rate of return (IRR) of 8.1% on those assets.
As at 31 December 2024, the company held a diversified portfolio of 25 asset-backed loans valued at £170.8m. NAV per share fell to 81.80p from 93.21p a year earlier, a 13.9% drop, driven by valuation losses, write-downs, and discount rate adjustments associated with the acceleration of realisations. The company’s market cap stood at £163.9m, with shares ending the year at 76.0p, reflecting a narrowing discount.
Despite this progress, the company recorded a total loss of £10.3m for the year, compared with a £18.3m profit in 2023. The decline was attributed to revaluations, borrower defaults, and lower asset sales proceeds in difficult market conditions. Eight loans, accounting for 23% of the portfolio by value, were classified as problem assets. The board noted that a revised valuation of one loan resulted in a further £7.2m write-down.
Dividends for the year totalled 6.325p per share, maintaining the fund’s target despite adjusted EPS of 4.90p, giving 0.77x coverage. The board said it intends to maintain the dividend as long as the company remains substantially invested and the policy remains practicable.
On governance, Philip Braun joined the board as audit committee chair, replacing long-serving directors Joanna Dentskevich and Colin Huelin, who stepped down at the May AGM.
Looking ahead, the board reaffirmed its commitment to the realisation plan, though it acknowledged that macroeconomic pressures and borrower refinancing constraints remain a challenge. Post year-end, the company received a further £9.2m in repayments and confirmed it has no new investment commitments outstanding.
[QD comment MR: GCP Asset Backed Income has made meaningful progress in its wind-down, with two major redemptions returning over two-thirds of the company’s market cap to shareholders during the year. That’s no small feat in what remains a tough refinancing environment for alternative credit.
Still, the portfolio’s underlying challenges are evident. A sharp NAV drop, eight problem loans, and a write-down on a significant position reflect the reality of a forced seller’s position in illiquid markets. The fund has held its dividend, but coverage is slipping – a sign that income sustainability may be tested as the portfolio shrinks.
Value recovery on the remaining book will hinge on execution and borrower cooperation and, given elevated uncertainty in markets, investors should brace themselves for a potentially less predictable outcome.]
