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Extra Material for April 2022

Updated: Apr 7, 2022

Four trust updates didn't make the editorial cut for the April 2022 newsletter (to be published on April 9th). Here they are.

Jupiter Emerging and Frontier Income (JEFI, 93.5p) announced in early March that it is planning to liquidate, and will provide more details in due course. With £60m of assets the trust looks too small to continue in a sector that obviously requires some resources. Lead manager Ross Teverson has subsequently departed, so former deputy Matthew Piggott has assumed responsibility. The current 8% discount looks about right to us, and does not indicate any particular arbitrage opportunity.

Pantheon Infrastructure (PINT, 105.75p) has announced its first investments since IPO, starting with a £36m stake in a European transport and logistics company specialising in the international trade in fruit and vegetables. PINT raised £400m from its IPO in November, and said at the time that it planned to assemble 8-12 assets within nine to twelve months. After a period of quiet, the deals are kicking in now, and PINT has added a global data centre business, the National Grid’s gas transmission and metering business, and a US wireless communications infrastructure operator to take capital deployment to 30%. It is good to see the managers executing the plan, though on an 8% premium we think the shares are high enough for now.

Pershing Square Holdings (PSH, 2920p), which continues to trade on what we regard as a much too high discount of 30.3%, has changed its dividend policy. The trust says that for the second quarter dividend that goes ex-dividend on 19th May and pays in mid-June, it is raising its payout by 25% to US$1.25 per quarter, which will also be the rate for the third and fourth quarters. In future years, PSH will pay quarterly dividends equivalent to multiplying the average PSH NAV over all the trading days in December of the prior year by 0.25%, but with a cap where total dividends paid do not exceed 125% of the average of total dividends paid in the each of the previous three years. But it would not be decreased from that level even if the NAV were to decline in a future year. That sounds a little complex, but it does provide a degree of certainty, not that the yield is of great importance here anyway at a current rate of 1.2%.

VPC Specialty Lending (VSL, 89.1p) says that one of its SPAC deals has collapsed, involving VPC Impact Acquisition Holdings II and FinAccel, the parent company of an Asian digital consumer credit platform called Kredivo. If the acquisition vehicle fails to find an alternative business combination, then it will receive rights over 3.5% of the equity of Kredivo, so that is some small compensation. VSL shares were not troubled by the news, which surprised us a little, although actually we think the market is taking a very cautious and measured approach to valuing these extra SPAC elements which seem best treated as a bonus when they come through. VSL’s underlying lending business continues to look solid to us, and of course the high yield of 9% is extremely supportive.

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