Volta Finance Limited - Net Asset Value as at 31 October 2021
Volta Finance Limited
(VTA / VTAS)
– October
2021
monthly report
NOT FOR RELEASE, DISTRIBUTION,
OR PUBLICATION, IN WHOLE OR PART, IN OR INTO THE UNITED
STATES
***** Guernsey, 12 November 2021
AXA IM has published the Volta Finance Limited
(the “Company” or “Volta Finance” or “Volta”) monthly report for
October. The full report is attached to this release and will be
available on Volta’s website shortly (www.voltafinance.com).
PERFORMANCE and
PORTFOLIO ACTIVITY
October’s performance was positive at 1.2%. The
year-to-date total return of the Company is 16.4%.
This good performance was mainly driven by the
high volume of cash flows we received from our assets in October.
Turning to the details, the monthly asset class performances**
were: +0.8% for Bank Balance Sheet transactions, +1.8% for CLO
equity tranches; +1.0% for CLO debt; -0.2% for Cash Corporate
Credit and ABS (together representing 3.0% of NAV).
As usual, October is a relatively high volume
month in terms of interest and coupons with the equivalent of €8.5m
being received. On a 6-month rolling basis to the end of October,
Volta received the equivalent of €26.4m. This was a new high for
Volta, representing a 19.7% annualised cash flow yield, based on
the end of the month NAV.
With ongoing cash flows continuing at a pace
close to or higher than 20% (annualised), Volta's strategy is
providing a performance that is very different from other
double-digit performing assets like common equities. Our
performance is mainly dependent on the current and ongoing
cashflows rather than a multiple-like PE ratio that may be affected
by an upward revision in the level of yields.
Regarding Volta's current main exposure, our
performance is firstly dependent on default rates in loan markets.
In this respect, we were expecting some improvement after the
stress of the Covid Crisis. It is fair to say that the decline in
the rates was faster than expected. At the end of October, the
12-month default rate was at 0.2% for US loans and 0.8% for
European loans. Companies can more easily refinance their debt and
M&A activity is frequently providing an exit strategy to some
of the stocks that suffered the most from the Covid crisis.
Whatever the exit strategy being pursued so far, many loans found a
way to refinance and the maturity wall is being extended towards
2027-2028, reducing significantly the probability of default for
the coming few years. The conclusion of this is that we are very
constructive at least for 2022 and 2023. At some point, we expect
to see the default rate slightly higher but considering the pace at
which loans are refinancing, it is difficult to imagine default
rates being significantly above 1.5% in the next two years. We are
back to a classic post-crisis situation: billions that have been
made available in the economic/financial systems are providing
prolonged support to the type of assets we are investing in.
In October, Volta crystallized an opportunity
that we locked in several months ago. We led the pricing of a
European CLO in Q3 2020 and obtained the right to require the
issuance of a B tranche on this deal at 95% of par. This tranche
has been issued and purchased by Volta in October while we are
almost certain this CLO will be reset (and the B tranche being
called at par) in December with a settlement in January 2022, the
next payment date for this CLO. In addition, we purchased two BB
tranches in CLO, one European equity tranche, and are still working
on opening a new US CLO warehouse to benefit from the large supply
in the US loan market (which is preventing loan spread
tightening).
As at the end of October Volta held about €3m of
cash available for re-investment.
As at the end of October 2021, Volta’s NAV was
€268.0m or €7.33 per share.
*It should be noted that approximately 8.0% of
Volta’s GAV comprises investments for which the relevant NAVs as at
the month-end date are normally available only after Volta’s NAV
has already been published. Volta’s policy is to publish its NAV on
as timely a basis as possible to provide shareholders with Volta’s
appropriately up-to-date NAV information. Consequently, such
investments are valued using the most recently available NAV for
each fund or quoted price for such subordinated notes. The most
recently available fund NAV or quoted price was 1.7% as at 30
September 2021, 5.5% as at 31 July 2021, and 0.8% as at 30 June
2021.
** “performances” of asset classes are
calculated as the Dietz-performance of the assets in each bucket,
taking into account the Mark-to-Market of the assets at period
ends, payments received from the assets over the period, and
ignoring changes in cross-currency rates. Nevertheless, some
residual currency effects could impact the aggregate value of the
portfolio when aggregating each bucket.
CONTACTS
For the Investment ManagerAXA
Investment Managers ParisSerge Demayserge.demay@axa-im.com+33 (0) 1
44 45 84 47
Company Secretary and
AdministratorBNP Paribas Securities Services S.C.A,
Guernsey Branchguernsey.bp2s.volta.cosec@bnpparibas.com +44
(0) 1481 750 853
Corporate BrokerCenkos Securities plcAndrew
WorneDaniel Balabanoff+44 (0) 20 7397 8900
***** ABOUT VOLTA FINANCE
LIMITED
Volta Finance Limited is incorporated in
Guernsey under The Companies (Guernsey) Law, 2008 (as amended) and
listed on Euronext Amsterdam and the London Stock Exchange's Main
Market for listed securities. Volta’s home member state for the
purposes of the EU Transparency Directive is the Netherlands. As
such, Volta is subject to regulation and supervision by the AFM,
being the regulator for financial markets in the Netherlands.
Volta’s investment objectives are to preserve
capital across the credit cycle and to provide a stable stream of
income to its shareholders through dividends. Volta seeks to attain
its investment objectives predominantly through diversified
investments in structured finance assets. The assets that the
Company may invest in either directly or indirectly include, but
are not limited to: corporate credits; sovereign and
quasi-sovereign debt; residential mortgage loans; and, automobile
loans. The Company’s approach to investment is through vehicles and
arrangements that essentially provide leveraged exposure to
portfolios of such underlying assets. The Company has appointed AXA
Investment Managers Paris an investment management company with a
division specialised in structured credit, for the investment
management of all its assets.
*****
ABOUT AXA INVESTMENT
MANAGERSAXA Investment Managers (AXA IM) is a multi-expert
asset management company within the AXA Group, a global leader in
financial protection and wealth management. AXA IM is one of the
largest European-based asset managers with 767 investment
professionals and €866 billion in assets under management as of the
end of June 2021.
*****
This press release is published by AXA
Investment Managers Paris (“AXA IM”), in its capacity as
alternative investment fund manager (within the meaning of
Directive 2011/61/EU, the “AIFM Directive”) of Volta Finance
Limited (the "Volta Finance") whose portfolio is managed by AXA
IM.
This press release is for information
only and does not constitute an invitation or inducement to acquire
shares in Volta Finance. Its circulation may be prohibited in
certain jurisdictions and no recipient may circulate copies of this
document in breach of such limitations or restrictions. This
document is not an offer for sale of the securities referred to
herein in the United States or to persons who are “U.S. persons”
for purposes of Regulation S under the U.S.
Securities Act of 1933, as amended (the “Securities Act”),
or otherwise in circumstances where such offer would be
restricted by applicable law. Such
securities may not be sold in the United States absent registration
or an exemption from registration from the Securities Act.
Volta Finance does not intend to register
any portion of the offer of such securities in the United States or
to conduct a public offering of such securities in the United
States.
*****
This communication is only being
distributed to and is only directed at (i) persons who are outside
the United Kingdom or (ii) investment professionals falling within
Article 19(5) of the Financial Services and Markets Act 2000
(Financial Promotion) Order 2005 (the “Order”) or (iii) high net
worth companies, and other persons to whom it may lawfully be
communicated, falling within Article 49(2)(a) to (d) of the Order
(all such persons together being referred to as “relevant
persons”). The securities referred to herein are only available to,
and any invitation, offer or agreement to subscribe, purchase or
otherwise acquire such securities will be engaged in only with,
relevant persons. Any person who is not a relevant person should
not act or rely on this document or any of its contents. Past
performance cannot be relied on as a guide to future
performance.
*****This press release
contains statements that are, or may deemed to be, "forward-looking
statements". These forward-looking statements can be
identified by the use of
forward-looking terminology, including the terms
"believes", "anticipated", "expects", "intends", "is/are expected",
"may", "will" or "should". They include the statements regarding
the level of the dividend, the current market
context and its impact on the long-term
return of Volta Finance's
investments. By their nature, forward-looking statements involve
risks and uncertainties and readers are cautioned that any such
forward-looking statements are not guarantees of future
performance. Volta Finance's actual results, portfolio composition
and performance may differ materially from the impression created
by the forward-looking statements. AXA IM
does not undertake any obligation to publicly update or
revise forward-looking statements.
Any target information is based on
certain assumptions as to future events which may not prove to
be realised. Due to the
uncertainty surrounding these future events, the targets are not
intended to be and should not be regarded as profits or earnings or
any other type of forecasts. There can be no assurance that any of
these targets will be achieved. In addition, no assurance can be
given that the investment objective will be achieved.
The figures provided that relate to past
months or years and past performance cannot be relied on as a guide
to future performance or construed as a reliable indicator as to
future performance. Throughout this review, the citation of
specific trades or strategies is intended to illustrate some of the
investment methodologies and philosophies of Volta Finance, as
implemented by AXA IM. The historical success or AXA IM’s belief in
the future success, of any of these trades or strategies is not
indicative of, and has no bearing on, future results.
The valuation of financial assets can
vary significantly from the prices that the AXA IM could obtain if
it sought to liquidate the positions on behalf of the Volta Finance
due to market conditions and general economic environment. Such
valuations do not constitute a fairness or similar opinion and
should not be regarded as such.
Editor: AXA INVESTMENT MANAGERS PARIS, a
company incorporated under the laws of France, having its
registered office located at Tour
Majunga, 6, Place de la
Pyramide - 92800
Puteaux. AXA IMP is authorized by
the Autorité des
Marchés Financiers under
registration number GP92008 as an alternative investment fund
manager within the meaning of the AIFM Directive.
*****
- Volta - October Monthly Report
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