The SQN Secured Income Fund proposes an equity issue in the first quarter of the 2019 with a tap or with a larger target capital raise of between £50m to £100m.
The SQN Secured Income Fund aims to provide shareholders with attractive risk-adjusted returns predominantly through investment in a range of SME loan assets and secured lending opportunities, diversified by way of borrower, sector, duration and geography.
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A statement released by SQN said: “Anticipating a period of political and market instability, SQN Asset Management sees this as an opportune time to increase the size of the fund and capitalise on an expanding opportunity set as cracks start to develop in the portfolios of non-traditional underwriters and volume driven platforms.
“This is expected to lead to either the sale of quality segments of seasoned portfolios or a reduction in competition around attractive risk adjusted high-yield transactions as other non-traditional investors shift their focus to portfolio maintenance.”
The proposed equity offering is expected to be an issue of ordinary shares and/or C shares. The SQN Secured Income Fund will also apply for a premium listing on the official list of the London Stock Exchange.
To support the SQN Secured Income Fund, the SSIF board has made the following appointments of finnCap as broker and sponsor, Kepler Partners as retail broker, and Dickson Minto as legal advisors.
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By GlobalDataDawn Kendall, managing director of SQN Asset Management, said: “We are delighted to announce this relaunch and growth plan for SSIF. This fund has tremendous potential and in the face of significant economic and political uncertainty, offers a unique investment vehicle that is well positioned for changing market dynamics, in addition to providing a significant source of uncorrelated dividend income for investors.”
“Although much work has already been successfully achieved, this relaunch will transform the size of the fund, improve liquidity, provide our shareholders with the benefits from being invested in a larger fund with a more significant critical mass and the opportunity to invest in our considerable pipeline of new transaction underwritten by our credit team.”
SQN secured income fund is a plan to overcome past issues
In May this year SQN redeemed £40m (€45.8m) in shares in its asset finance income fund, following slower than expected deployment of capital at that point. The amount returned to shareholders was equivalent to around 22% of the £180m raised through C shares in December 2016.
SQN has also experienced ongoing problems with US solar panel provider Suniva, which fell into financial difficulties following a steep decrease in domestic solar panel prices from 2016. In June SQN announced that they planned to recoup all of the £21.7m (€24.4m) facility left outstanding to the company by Suniva.
In February, the SQN asset finance income fund entered an agreement to buy up one of its lessees, Snoozebox, in order to re-sell it to avoid an £8.2m (€9.2m) potential loss to the fund.
Under the agreement, Snoozebox, which provides hospitality accommodation through repurposed shipping containers, will be bought by SQN and then sold to an unnamed new owner.
