View the article online at http://citywire.co.uk/money/article/a975134
Small business loan trust targets 6.5% yield
RM Secured Direct Lending plans to raise £100 million and target lending to small and medium-sized businesses.
RM Secured Direct Lending (RMDL), an investment trust specialising in small and medium-sized business lending, is to float on the main market.
The trust plans to raise £100 million through a London Stock Exchange listing in order to expand its lending to small and medium-sized businesses, which it said have been locked out of borrowing since the financial crisis.
It focuses on loans with ‘a degree of inflation protection through index-linked returns’ and will aim to generate regular dividends, with a targeted yield of 6.5% once fully invested.
To be eligible for RM loans businesses much be able to demonstrate ‘visibility over cashflow and earnings and strong management teams’ and the loans will range from £2 million to £10 million with maturities ranging from two to 10 years. The loans will be secured against ‘contracted, predictable medium to long-term cashflows’ or physical assets held by businesses.
To ensure diversity of loans there will be maximum exposure limits in sectors and the trust said it had a seed portfolio and a pipeline of loans worth £136 million lined up.
James Robson, chief investment officer at RM Capital, which is the investment manager of the trust, said: ‘Secured lending offers excellent risk adjusted returns in a part of the market underserved by banks and other non-bank lenders.
‘RM has the capability to originate and source loans across a broad range of sectors with robust security packages which offer stable and predictable returns while also enabling the growth and development of well-established SMEs who are the backbone of the UK economy.’
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In this guide to investment trusts, produced in association with Aberdeen Asset Management, we spoke to many of the leading experts in the field to find out more.
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