VPC Specialty Lending Investments plc - VSL

A closed-ended investment company focused on asset-backed lending. This trust may use gearing and tactical use of options.

9.4% dividend.
Trading 20% below NAV.
A lender to lenders.
A diverse group of lenders in a diverse range of sectors.
No loss of income from portfolio lenders during covid crisis.
The company is Trading at £380 million.
The investment managers (Victoria Park run a total portfolio of £7 billion). A small part is vpcs speciality lending.

PS a 2.3% spread. NOT one to trade.
Legal and general have a spread of 0.08%.

Down a significant amount now on a 30% discount and 10.5% dividend. No news to support the fall. I have been investing pennies may start investing £.
On the AIC site it’s dropped down the table so appears to be just VPC.
It lends to subprime lenders who obviously take first loss. Received full income through COVID and upto now.

1 Like

@Okumamac
Look at VCP speciality lending as an alternative. It’s a lender to to sub prime lenders. IE the borrower take first loss. Had no problems during COVID all interest paid by the borrower’s. The sector debt-direct lending (investment trusts) are all on big discounts.
VCP share price fell and discount increased recently. Can find no news item for the reason.
It’s estimated NAV is now a fair bit below its actual NAV. Discount is based estimated NAV.

https://www.theaic.co.uk/aic/find-compare-investment-companies?sec=DDL&sortid=Name&desc=false

https://www.theaic.co.uk/aic/find-compare-investment-companies?sec=DDL&search=Vcp&sortid=Name&desc=false

VCP is on a 31% discount. 10.6% dividend.

2 Likes

@Okumamac
Just noticed it’s up 5.33% Friday.
So the discount isn’t accurate as it relates to the previous day. Dividend still over 10%.
Dividend not increased for 4 years as in 8p a year, 2p a quarter.
The company running this investment trust has 7 billion under management. Or put another they are experts in this type of investment.
No guarantees attached to the last statement.

2 Likes

The companies strategy doesn’t appear to be unloved
“June 13, 2022 – Victory Park Capital (“VPC”), a leading global alternative investment firm specializing in private credit, announced today the final close of its latest fundraise for its Asset Backed Opportunistic Credit strategy (the “Fund”). The Fund is oversubscribed at $2.4 billion”
The above is not directly related to the investment trust but gives you an idea of the markets view of the company’s credit strategy.
The information comes from
https://www.lse.co.uk/ShareChat.asp?ShareTicker=VSL&share=Vpc-Specialty&thread=83033E1F-480D-496A-B973-2BC5F71D04F2

VPS 2.6% spread not in my opinion one to trade.
NSF 4% spread and no dividend. Not in my opinion one to buy!!!

1 Like

Hey @SD235 great post with some really good detail. You’ve got a really good knowledge base.

Animals of Freetrade. 🐾 🐠 🦅 :wink: :dog:

Price fallen a decent amount after i bought them!
10.84% (based on mid-market price)
Dividend is payed as interest.
More investment trusts could but don’t pay the dividends as interest.
So this can be covered by your £1,000 savings tax allowance or your £5,000 starter savings tax allowance.

I am afraid its not very clear but its only in reference to interest paid by the following.

Interest covered by your allowance

Your allowance applies to interest from:

  • bank and building society accounts
  • savings and credit union accounts
  • unit trusts, investment trusts and open-ended investment companies
  • peer-to-peer lending
  • trust funds
  • payment protection insurance (PPI)
  • government or company bonds
  • life annuity payments
  • some life insurance contracts

From RNS dividend declaration.
“The Company has elected to designate all of the interim dividend for the three-month period to 30 June 2022 as an interest distribution to its shareholders, thereby “streaming” income from interest-bearing investments into dividends that will be taxed in the hands of shareholders as interest income. No income tax will therefore be deducted at source from this, or from future interest distributions.”

NAV have fallen recently.
When Lending money to what are classed as fintechs they are normally given free or near free shares in the companies.
As these types of companies have seen a significant fall in value the NAV of VSL has fallen.
Most are unlisted so unlikely to have any real value in the short term.

“In our last Annual Report, we highlighted that the Company benefited significantly from its equity interests during 2021 but I feel it is important to remind investors that they were for the most part a by-product of its core lending activity. The equity interests have been volatile in the year to date and their fall has led to an overall negative NAV return for the period. This was largely because the equity interests derived from the core lending business give us equity participation (at minimal cost) in the high-growth technology companies to which we lend and such entities have seen their share prices fall this year”

Taken from the half year report

Fallen significantly with the market.
10.5% dividend (don’t expect it to increase any time soon) 29% discount. No defaults unlike my supposedly lower risk Sequoia Infrastructure investment trust. 3 defaults there and the rise in gilt yeilds have hit the share price hard.

NAV fell again (4p). Again a product of there unlisted holdings in fintechs. No movement in share price. The market has finally accepted they are about dividends and not the fall in the valuation of the unlisted that may never be listed shares.
Importantly for a investment trust that pays a very large dividends (8p per share)it has a 5 year share price gain albeit only 5%. Thats Despite being on a 20% discount. A real rarity.

Compare with Henderson far East, similar dividend although they grow the dividends year on year about 3%. 4.2% premium but a 33% share price fall over 5 years.
Henderson far east total returns over 5 year -5%

VPC Specialty total returns over 5 years +78%
Dividends are paid as interest pay tax only if use up your £1,000 savings tax allowance or and your £5,000 starter savings tax allowance.
Now i remember why i sold Henderson for a small share price gain and 8.3% dividend since march 2020.
Its because its shite!!

Up 3.5% for me. Unexpected, thought this would do nothing other than pay its large dividend.
Presently the dividend is 9.2%. This is actually based on middle price. Spread is variable but normally large about 2.5%. So i would say about 9.1% dividend.
Very unusual it has share price gain over 5 years of 12%.
The higher the dividend the lower the share price gain.
At 9.0% i would expect around a loss of 20% on the share price over 5 years or even more.
May still be bargain. My opinion only.

1 Like

Its NAV has fallen significantly. Supposedly 66% of assets are loans 44% are shares in fintechs which have been hammered (don’t quote me on the percentags, it’s just what I read on another site). These shares appear to be making a comeback. I am using international personal finance as bellweather for this sector. It’s share price has risen significantly recently. It is a subprime lender.
VSL has also announced that the interest rates charges have risen from 10.5% (December 2021) to 13.8 last month. All its interest rates are floating rate. It has basically “captured” the increase in the base rate more or less instantly. Theoretically this should be a great buy even if NAV and dividends don’t rise. The 18% discount will go to par as they sell off the assets in the meantime you will have an excellent dividend (about 9.5% at the moment)
things to note.
The cost of selling of all these assets as they come to end might be high.
If you want to sell before the end I expect the spread will get larger.
A lot of the shares they own are in unlisted companies who do they sell them to??