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Direct lending fund beats dividend target, launches new fundraise

The RM Secured Direct Lending fund is looking to raise new capital through the issuance of new C shares and Zero Preference shares, according to regulatory filings.

Launched back in December 2016 raising £50.6m, the fund has raised another £30m through a C share issue in October 2017 but its managers have said on several occasions that the strategy can be scaled up significantly.  The fund has clocked up a 4.2 per cent dividend pay out last year beating its 4 per cent target.

James Robson, chief investment officer of RM Funds, the portfolio’s investment manager, said: “We have seen excellent momentum since we launched in 2016. We have raised and deployed funds quickly, including our most recent C Share issue, into attractive assets that meet our strict investment criteria. We have also exceeded our first year target return of 4 per cent and remain on track to increase this to 6.5 per cent for 2018. We continue to see a number of bespoke, higher-yielding lending opportunities to established businesses that offer attractive returns profiles across a number of sectors.”

The fund invests in secured debt of UK SMEs and mid-market corporates and is currently trading on a 4.4 per cent premium and has so far invested in 23 loans to mid-market firms since launch but says it has an extensive pipeline of opportunities.

The fund’s chairman Norman Crighton recently said: “The Board believes the Company is well positioned to capitalise on opportunities during the next period as the Investment Manager has demonstrated the ability to source excellent investment opportunities and undertake a rigorous credit analysis and due diligence process.”

Today the fund has given further guidance on a new fundraise that will include an issue of C Shares at 100 pence per C Share, an Initial Placing of zero dividend preference (ZDP) Shares at 100 pence per ZDP Share. 

The ZDP Shares will have a life of three years and, on that basis, a Final Capital Entitlement of 110.91 pence per ZDP Share on the ZDP Repayment Date (6 April 2021), equivalent to a Redemption Yield of 3.5 per cent per annum (compounded annually) on the Initial ZDP Placing Price.

 No further details on the scale of the fundraise have yet been given.

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