TIDMALGW
RNS Number : 8789K
Alpha Growth PLC
27 April 2020
Alpha Growth plc
("Alpha", or the "Company")
Periodic Corporate Update
Alpha Growth plc (LSE: ALGW), the financial services specialist
in the growing Senior Life Settlement ("SLS") asset class released
a podcast with an update on the Company's activity following its
annual general meeting.
The podcast included discussions with Gobind Sahney, Danny
Swick, and Austin King from the Company and was provided through
Vox Markets, the Company's IR platform provider. The podcast
provided the listener with a recap of the Company's business and
revenue model with a current update on its strategies.
To provide those who were not able to listen to the podcast, the
following is a summation of the podcast, with additional
information in answer to questions that the Company received after
its release.
Corporate Update
Since its startup and listing two years ago, the Company has
embarked on a strategy of securing mandates to manage longevity
assets and more specifically SLS assets. Through a combination of
engagement by third party clients and/or internal origination of
structured products, the objective has been to achieve fee and
performance-based revenue.
The Company's aspirational objective was to achieve a certain
number of advisory mandates, along with the origination of
structured products. Admittedly, the time frame to achieve these
objectives has evolved and stretched out as conversations became
more detailed.
The nature of the advisory mandates was adapted to institutional
investor requirements. In particular, the Company developed the
Hybrid product - which is a debt/equity structure for highly
regulated institutions like insurance companies operating under
Solvency II regulations. Arranged by EY, a round table of the top
10 insurance companies in the UK, resulted with the attendees
liking either debt or the equity component. Although the Company
still maintains the ability to offer the Hybrid as a single product
if and when required, in light of the feedback received, the
decision was made to focus on the debt and equity components
separately.
The current financial environment is highly relevant for
longevity assets. Based on discussions with investors, the opinion
of the Directors is that there is demand for assets, such as SLS,
which are non-correlated to real estate, equity capital and
commodity markets. On the supply side for SLS, based on discussions
with SLS providers, the market pullback in the US has created a
need for liquidity which has brought additional policies into the
market with individual policy holders selling their unneeded
insurance policies.
How a SLS is non-correlated to the real estate, equity capital,
and commodity markets is a function of time. As the time that
passes gets closer to the realisation of the face value of the
policy, the value of the asset increases. Hence the steady increase
in the net asset value of the investment over time. This makes it
highly attractive to investors wishing to counteract volatility
within an investment portfolio and add yield.
At the end of its FY2019, the Directors decided that the Company
should focus its resources on certain specific strategies.
The following is an update on the focused strategies.
BlackOak Alpha Growth Fund - The fund had its official launch
September 2019 when the seed capital was contributed. The initial
administrator of the fund was acquired by Opus Fund Services in
September, presenting some challenges in the timely issuance of
reports. Additionally, the Company was required to wait for the
completion of the historical track record review being completed by
KPMG in order to begin active investor marketing. By December 2019
Opus Fund Services was up to speed and the track record review was
completed. In November, the Company brought on board Austin King to
exclusively work on marketing the fund and to develop a robust
marketing program. Utilising his network and subscription services,
such as Discovery Data, he has developed a target list of 10,000+
US registered investment advisors (RIAs) with hundreds of billions
under management. Since January 2020, both Gobind and Danny along
with Austin, have conducted numerous calls with RIAs and their
clients, which the Company expected to convert into allocations to
the fund over February and March. However, the market volatility
delayed those allocations due to liquidity issues facing the
investors. Despite this, no investor who discussed making such an
allocation has given notice of cancel such intention. In the
interim, the fund has continued to produce results with a NAV of
$10.155m at the end of September 2019 and the latest NAV calculated
as of March 2020 of $10.830m. This has produced a total return of
5.01% on a gross basis and 4.03% on a net basis. The current SLS
composition of the fund comprises 33 policies with a combined face
value of $27.4m. In the Directors' opinion, the fund is well
positioned to attract capital and continue gaining traction, even
during this volatile period due to how SLS performs as a
non-correlated asset. With continuous marketing still occurring and
consistent results being posted monthly, the benefit of investing
in SLS assets are well showcased by the fund. A survey of 107
leading limited partners this month by Eaton Partners, a global
placement company owned by Stifel, indicated that 22% of those
surveyed viewed Senior Life Settlements as one of the strongest
alternative assets. The results of this survey can be seen on the
Company's website.
Warehouse Loan/Short Term Credit Facility - The Directors
recognise that this particular strategy has drawn quite a bit of
interest and commentary from the market. When the Company announced
the progression of its discussions it was having with a leading UK
asset manager in December, conversations and preliminary due
diligence had reached a point where the commencement of documenting
the intended transaction had started and required the raise of
additional working capital to cover the transactional costs. The
Company and the asset manager had every intention of closing the
transaction in early Q1. By the start of the market volatility due
to Covid19 around the week of February 17(th) , progress had been
made by both parties in organising the terms and timeline around
completing the transaction. However, the counterparty needed to
allocate its resources to managing other parts of their business
directly affected by the market turmoil. Although, communications
have continued on various levels and tasks this has caused a delay.
The Company remains hopeful that once markets normalise the
discussions and negotiations will pick up. The Company still
expects the fee model associated with this strategy will be as
anticipated. The Company is subject to certain confidentiality
restrictions which preclude it from saying more or identifying the
counterparty. Moreover, even if the name of the asset manager firm
wasn't confidential, the Company would be reticent to state the
name in the public domain as this would eliminate a strategic
advantage over its competitors. As and when further details can be
publicly announced, the Company will do so.
Separate Managed Accounts - The Company was approached and has
entered into discussions with sponsors of proprietary funds to
manage the longevity assets within those funds or what we call
separate managed accounts. The Company continues to receive and
have discussions with parties that wish to allocate funding,
usually at a minimum of $25m, to invest in SLS, and to appoint the
Company to act as the advisor or sub-advisor for a fee. During 2019
the Company had several of these opportunities present themselves.
To avoid a dilution of its resources, the Company focused on
discussions that were with parties pre-vetted by, or already known
to, the Directors. These opportunities had reached a stage where
early 2020 was proving to be the inflection point for the
discussions, particularly as the equity markets were viewed as
being "toppy", with the investors wishing to diversify into
non-correlated assets. Whilst market turmoil has caused liquidity
issues for these investors (who would be likely to want to allocate
funds currently invested in equities into SLS assets) but has not
diminished their desire to diversify into SLS. The Company is in
contact with these parties who recognise the executives and the
Company as a valuable resource for their long-term objectives.
Working capital and impact of COVID19
The Company has sufficient working capital to complete its
strategies as outlined above. However, as can be seen from the
summary above, the impact of COVID19 has had an effect on the
timing of various counterparties to transact with the Company and
this may impact on Company's financial results in FY20 if delays
should continue for an extended period of time. However, the
Company is confident that, particularly with record low interest
rates, continued volatility in the equity markets and the
non-correlation of SLS assets, it will be able to continue those
discussions in the near terms, and also take advantage of further
opportunities as and when they arise.
The Company takes this opportunity to recognise the heroic
front-line workers in the fight of COVID19 and the victims. The
Directors wish to give their condolences to Jason Sutherland who
lost his mother last week to the Coronavirus.
The Directors thank the shareholders for their continuing
support and look forward to making progress on all strategies in as
timely a manner as possible.
The information communicated in this announcement contains
inside information for the purposes of Article 7 of the Market
Abuse Regulation (EU) No. 596/2014.
For more information, please visit www.algwplc.com or contact
the following:
Alpha Growth plc
Gobind Sahney, Executive Chairman +44 (0) 20 3959 8600
info@algwplc.com
About Alpha Growth plc
Specialist in Longevity Assets
Alpha Growth plc is a financial advisory business providing
specialist consultancy, advisory, and supplementary services to
institutional and qualified investors globally in the multi-billion
dollar market of longevity assets. Building on its well-established
network, the Alpha Growth Group has a unique position in the
longevity asset services and investment business, as a listed
entity with global reach. The Group's strategy is to expand its
advisory and business services via acquisitions and joint ventures
in the UK and the US to attain commercial scale and provide
holistic solutions to alternative institutional investors who are
in need of specialised skills and unique access to deploy their
financial resource in longevity assets.
SLS Assets and Non-correlation
A SLS refers to the sale of an existing life insurance policy to
a third party for a cash payment. Such a payment will be in excess
of the policy's surrender value, but less than its face value.
After the sale, the purchaser becomes the policy's beneficiary and
assumes payment of its premiums. There are many reasons why policy
holders may choose to sell their life insurance policies and sales
are usually only undertaken when the insured person doesn't have a
known life-threatening illness. The SLS provides individuals with
policies the option to realise value from an asset under a
regulated transaction. As a longevity asset, the SLS is
non-correlated to the real estate, equity capital and commodity
markets. Its value is a function of time because as time passes the
value gets closer to the face value of the policy. Hence creating a
steady increase in the net asset value of the investment. This
makes it highly attractive to investors wishing to counteract
volatility within an investment portfolio and add yield.
Note: The Company only advises on and manages SLS Assets that
originate in the USA where the SLS market is highly regulated.
Forward Looking Statements Disclaimer
Certain statements, beliefs and opinions in this document are
forward-looking, which reflect the Company's or, as appropriate,
the Company's directors' current expectations and projections about
future events. By their nature, forward-looking statements involve
a number of risks, uncertainties and assumptions that could cause
actual results or events to differ materially from those expressed
or implied by the forward-looking statements. These risks,
uncertainties and assumptions could adversely affect the outcome
and financial effects of the plans and events described herein.
Forward-looking statements contained in this document regarding
past trends or activities should not be taken as a representation
that such trends or activities will continue in the future. The
Company does not undertake any obligation to update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise. You should not place undue reliance on
forward- looking statements, which speak only as of the date of
this document. Readers should not treat the contents of this
document as advice relating to legal, taxation or investment
matters, and are to make their own assessments concerning these and
other consequences, including the merits of information and the
risks. Readers of this announcement are advised to conduct their
own due diligence and agree to be bound by the limitations of this
disclaimer.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
UPDUNARRRRUSUAR
(END) Dow Jones Newswires
April 27, 2020 02:00 ET (06:00 GMT)
Alpha Growth (LSE:ALGW)
Historical Stock Chart
From Jul 2024 to Jul 2024
Alpha Growth (LSE:ALGW)
Historical Stock Chart
From Jul 2023 to Jul 2024