29th Mar 2019 13:10
LONDON (Alliance News) - GCP Asset Backed Income Fund Ltd on Friday reported a rise in net asset value as its loan portfolio value increased on 25 new project investments.
The fund - which invests in UK asset backed loans - reported a NAV per share of 101.74 pence at December 31 compared to 100.85p at the end of 2017, a rise of 0.9%.
GCP Asset Backed Income's investment portfolio increased 45% in value to GBP378.4 million from GBP261.8 million the year before.
The fund's dividends in 2018 increased 5.0% to 6.35p from 6.05p distributed the year before. The 6.35p total included a special dividend of 0.25p, allowing the fund to exceed its 6.1p target payment for the year.
"The group continued to invest into key sectors with its existing borrowers who have demonstrated strong stewardship of their businesses. Loans were entered into with a number of new borrowers and it is envisaged that over time further deals will be completed with these parties," said Chair Alex Ohlsson. "The group continues to invest using a project finance, covenant focused approach to debt. The board believes this method, alongside developing strong relationships with borrowers and understanding their businesses, is a significant contributing factor to the strength of the group's loan portfolio."
The fund has a portfolio of 35 asset backed loans with an average life of eight years, which are partially inflation and-or interest rate protected.
The largest sector in the fund's portfolio is Property - which makes up 41% of investments with a value of GBP155.4 million. The second highest is Social Infrastructure, commanding 39% of the portfolio with a value of GBP147.5 million.
In 2018, the fund advanced GBP129.2 million in loans secured against 25 projects - with ten new and 15 follow-on transactions. The fund advanced a further GBP27.3 million secured against twelve projects post-year end.
Looking ahead, Ohlsson commented: "Political and regulatory risks are inherent in any UK focused business at present. At the date of writing, the impact of Brexit remains uncertain. Aside from the macro-economic impact, there is the risk of an increase in operating costs for certain of the group's borrowers as well as implications if the free movement of labour ceases. The Company and the Investment Manager are cognisant of these risks and continue to perform stress testing on loans during the structuring process to ensure the loans remain viable in a variety of possible scenarios."
Shares in GCP Asset Backed Income Fund were up 0.5% Friday at 108.00 pence each.
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