TIDMHSLE
RNS Number : 2635H
HarbourVest Senior Loans Europe Ltd
16 May 2014
Interim Management Statement
FOR THE PERIOD 31 DECEMBER 2013 TO 15 MAY 2014
This Interim Management Statement relates to the period from 31
December 2013 to 15 May 2014, unless otherwise stated. Through this
statement, the Group refers to the Company and its wholly-owned
Luxembourg subsidiaries.
HarbourVest Senior Loans Europe Limited (the "Company") is
publishing this Interim Management Statement in accordance with DTR
4.3 of the FCA Handbook.
This Interim Management Statement has been produced solely to
provide additional information to shareholders as a body to meet
the relevant requirements of the UK Listing Authority's Disclosure
and Transparency Rules. It should not be relied upon by any other
party or for any other purpose. The Statement has not been
audited.
This Interim Management Statement relates to the period from 31
December 2013 to 15 May 2014, unless otherwise stated. Through this
statement the Group refers to the Company and its wholly owned
Luxembourg subsidiaries.
Investment Policy & Objective
The Company's investment objective is to provide shareholders
with a combination of a high level of income and capital growth
over time, whilst preserving capital. The investment period of HSLE
has now concluded and the Company has invested in accordance with
this original investment policy and objective. The Company has
invested in senior secured loans of private equity-backed European
mid-market companies.
These loans include amortising debt (i.e. loans that are repaid
over the life of the loan) as well as term debt (i.e. loans that
are repaid at maturity) and other forms of credit facility (e.g.
loans drawn over time and repaid over the life of the loan or at
maturity). All of the loans in which the Company has invested are
in the senior secured tier of a borrower's debt capital structure
(i.e. loans with first ranking security over the borrower's assets
and / or its shares). The Company did not buy distressed loans.
Manager Review
Despite short term volatility and uncertainty surrounding the
Ukrainian political tensions, the period from 31 December 2013 to
15 May 2014 saw signs that a lasting economic recovery is now
underway across Europe following the emergence from recession a
year ago. In recent months, confidence has improved and business
indicators now remain above long term levels. The latest forecasts
from the European Commission show that real GDP growth for 2014 is
set to reach 1.6% in the EU, improving further to 2.0% in 2015.
Domestic demand, combined with falling unemployment rates (10.5%
2014 forecast in the EU, down from 10.8% in 2013) and historically
low inflation rates (1.0% 2014 forecast in the EU), has seen a
gradual upturn in the medium term economic outlook.
The improved macroeconomic outlook is driving investors'
expectations of the forecast European leveraged loan default rate,
which is assumed to be approximately 4% by the end of the year
(down from 4.2% in February 2014 according to S&P LCD
commentary and data).
Since the start of the year, the European leveraged loan market
has seen borrowers opportunistically take advantage of the
improving outlook, with leverage for new transactions now
increasing to circa 5.6x YTD (up from circa 4.6x for 2013), and the
re-emergence of structural features such as covenant lite loans and
second lien facilities. New issuance YTD stands at EUR14.8 billion,
compared to EUR9.4 billion for the prior year, due in part to the
EUR3.7 billion loan package for the Numericable / Altice M&A
driven recapitalisation.
At 31 March 2014 the estimated Net Asset Value (NAV) of the
Company was 39.11 pence per share.
Investment Update
At 31 March 2014, the Company's portfolio consists of seven
loans representing approximately GBP49.2 million of NAV. At 31
March 2014, the NAV exposure was approximately 53% to sterling and
47% to euro. The weighted average margin of the Company's portfolio
was 459 basis points.
On a geographical basis, the Company's loans, as measured by
their current value, provide exposure to the following countries:
the UK (47.7%), the Netherlands (31.5%), Germany (12.4%) and Sweden
(8.4%).
The level of refinancing across the portfolio remains
strong.
Outlook
HSLE benefits from a portfolio of lowly leveraged companies,
with loan-to-value ("LTV") at approximately one-third based on the
enterprise values (on a weighted average basis) of the investee
companies and an above market spread (459 basis points weighted
average spread versus the rolling three month weighted average
spreads of all new issue leverage buy outs of 392 basis points,
according to S&P Capital IQ data). The market opportunity
remains appealing with a strong investor demand for yield and the
attractions of a floating rate product increasing as expectations
for rate rises continue to gather pace, allied to an ongoing need
for alternate sources of debt financing.
Material Events and Transactions
While the Company employs a buy-and-hold strategy, the
investment manager and sub investment adviser actively monitor the
portfolio to achieve liquidity or rebalance sector or company
positions
On 28 February 2014, Spire Partners was appointed as sub
investment adviser to the Company's investment manager.
During the period, there were two refinancings. One transaction
was announced in January 2014 with proceeds received in February
2014, and a second refinancing was completed in April 2014.
Finally, in April 2014 one further portfolio company announced that
it intends to proceed with an initial public offering. The gross
proceeds of the issuance of shares are intended to reduce
borrowings, thereby resulting in a full repayment of the existing
loan. This remains subject to the successful floatation, which is
currently scheduled for later in May 2014.
Dividend and Capital Return
As a result of recent refinancing proceeds and capital
repayments, the Company made a capital return to shareholders
equivalent to 5.85 pence per share, which was paid to shareholders
on 17 January 2014. This brings the total capital return payments
since inception to 55.51 pence per share.
The Company also made a dividend payment of 0.69 pence per share
on 21 March 2014. This brings total ordinary share dividends since
inception to 9.59 pence per share.
Reports and Accounts
The Company's Half Yearly Report and Unaudited Condensed
Consolidated Financial Statements were made available to
shareholders on 28 February 2014.
The Company's Audited Annual Report and Accounts will be
produced for the period ended 30 June 2014 and will be distributed
to shareholders within four months of the period end.
Financial Highlights
The financial information for the period ended 15 May 2014
contained within this Interim Management Statement has not been
audited.
Other Notices
The Company intends to publish its estimated NAV per share for
the month ending 30 April 2014 on 22 May 2014. The estimated NAV
per share for the month ending 31 May 2014 is due to be published
on 20 June 2014.
By order of the Board.
BNP Paribas Securities Services S.C.A., Guernsey Branch, for and
on behalf of HarbourVest Senior Loans Europe Limited as Company
Secretary.
Key Metrics at 31 March 2014
Net Asset Value GBP54.71m
Market Cap (total) GBP50.36m
Net Gearing 100
Share Price 36.00p
Net Asset Value Per Share 39.11p
(Discount)/Premium -7.95%
Share prices are official London Stock Exchange closing
prices
Sources
London Stock Exchange
Company's Administrator
HarbourVest Senior Loan Advisers L.P.
Spire Partners LLP
Contacts
INVESTMENT MANAGER SUB INVESTMENT REGISTERED OFFICE KEY INFORMATION
HARBOURVEST SENIOR ADVISER BNP Paribas House Fund Type Closed-ended
LOAN ADVISERS L.P. Spire Partners St Julian's Avenue Fund
c/o HarbourVest LLP St Peter Port Base Currency UK
Partners, LLC 20 Berkeley Square Guernsey GY1 Sterling
One Financial Center 7(th) Floor 1WA ISIN GG00B4N5LG23
44(th) Floor London W1J 6EQ Channel Islands Ticker HSLE
Boston MA 02111 Tel +44 (0)20 7042 Tel +44 (0) 1481 AIC Sector Global
U.S.A. 6300 750 850 High Income
Tel +1 617 348 Domicile Guernsey
3707 BROKERS NAV Frequency Monthly
Fax +1 617 350 Liberum Capital Dividend Policy
0305 Tel +44 (0)20 3100 Semi-Annual
2000
The commentary provided in this document is provided by the
Company's investment manager and sub investment adviser.
For the purposes of efficient portfolio management, the Company
has established one wholly-owned, Luxembourg incorporated
subsidiary, Orange Senior Loans 1 S.à.r.l. which in turn itself has
two wholly-owned, Luxembourg incorporated subsidiaries, Orange
Senior Loans 2 S.à.r.l. , and Orange Senior Loans 3 S.à.r.l..
Together, the Company and its subsidiaries, which have been
incorporated for the purpose of holding primary and secondary loans
respectively, for the Group. All references to the Group in this
Factsheet refer to the Company and its wholly-owned Luxembourg
subsidiaries. This document is not intended to be an invitation to
engage in investment activity or a sales instrument; it constitutes
neither an offer nor an attempt to solicit offers for the
securities described herein. The report was prepared using
financial information contained in HSLE's books and records as of
the reporting date. This information is believed to be accurate but
has not been audited by a third party. This report describes past
performance, which may not be indicative of future results. The
opinions and forecasts expressed herein are based on information
which HSLE, Spire Partners LLP, and HarbourVest Senior Loan
Advisers L.P. believe to be accurate and reliable at the time of
publication, however, these opinions and forecasts may change
without notice. The information contained herein, including any
expressions of opinion or forecast, is for information purposes
only and is given on the understanding that it is not a
recommendation and anyone who acts on it, or changes their opinion
thereon, does so entirely at their own risk. Neither HSLE nor Spire
Partners LLP nor HarbourVest Senior Loan Advisers L.P. accept
liability for actions taken on the basis of information
provided.
This document may contain information obtained from third
parties, including ratings from credit ratings agencies such as
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ratings are statements of opinions and are not statements of fact
or recommendations to purchase, hold or sell securities. They do
not address the suitability of securities or the suitability of
securities for investment purposes, and should not be relied on as
investment advice.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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