Volta Finance Limited - Net Asset Value(s) as at 31 December 2019
Volta Finance Limited (VTA / VTAS) –
December 2019 monthly report
NOT FOR RELEASE, DISTRIBUTION OR PUBLICATION, IN WHOLE
OR IN PART, IN OR INTO THE UNITED STATES
***** Guernsey, 10 January 2020
AXA IM has published the Volta Finance Limited
(the “Company” or “Volta Finance” or “Volta”) monthly report for
December. The full report is attached to this release and will be
available on Volta’s website shortly (www.voltafinance.com).
PERFORMANCE and PORTFOLIO
ACTIVITY
In December, Volta’s NAV* total return
performance was +3.3%, bringing the gain for 2019 as a whole to
6.7%. During the year, the share price total return was greater, at
8.5% as the discount to NAV narrowed. This discount narrowing,
whilst modest, was pleasing and may well reflect the considerable
efforts during the year to improve shareholder communications and
bring Volta to a wider audience.
All the performance in 2019 reflected cashflows
from the underlying assets and the consequent dividend payments to
shareholders. Dividends totaled €0.62 per share during 2019, paid
in 4 quarterly installments. Based on the end of 2018 NAV per share
of €7.71, this represents a dividend yield of over 8%. In contrast,
mark-to-market prices of Volta’s assets declined modestly during
the year, reflecting the conditions in the underlying loan markets.
A little over 80% of the Company’s assets are CLO debt or equity
tranches.
Through 2019, Volta’s portfolio has been
significantly rotated as we utilised our broad mandate across the
structured credit universe to seek out the best opportunities. We
significantly increased the CLO Equity bucket (from 36.4% to 52.6%,
including CMV and warehouses) at the expense of CLO debt. We also
reduced the size of the Repo we have on CLO debt from $50m to $35m
to limit our sensitivity to price volatility.
By way of illustration, in 2019, USD CLO Debt
(not taking into account the benefit of the Repo leverage)
performed** 9.1% (in USD terms) relative to 13.3% for USD CLO
Equity. The third largest asset class of the portfolio, EUR CLO
equity positions, performed** less, 6.9%, although it is fair to
recognize that this lower performance partially reflects interest
rate differentials given that it is in EUR terms.
For 2020, whilst we expect loan markets to
continue to face some challenges, particularly a greater number of
downgrades than upgrades (the ratio was close to 3 to 1 in 2019),
we still do not expect default rates to increase significantly. In
this context, CLO Equity, although being the first loss position,
is the only tranche that can benefit from loan market price
volatility through reinvestments inside CLO loan portfolios.
In December, we invested the equivalent of €3.3m
through commitments to existing positions (the European CLO
warehouse that was opened in July and the latest regulatory capital
trade). On average, based on standard assumptions, these positions
were purchased with a projected yield close to 13.5%. We sold five
CLO debt positions (3 BB rated USD tranches and 2 B rated EUR
tranches) for the equivalent of €12.4m in order to finance the end
of December dividend payment and to reduce by $5m the amount
borrowed through our repurchase agreement.
During the month, Volta received the equivalent
of €0.3m in terms of interest and cash flows from its assets. On a
rolling 6-month basis we were at €21.9m; an annualised yield at
15.7% of the end of month NAV. This is amongst the highest levels
seen for many years for Volta in terms of its ability to generate
cash flows from its assets. In January, some of the most recent CLO
Equity purchases will pay a cashflow for the first time, adding to
this measure of performance.
As at the end of December 2019, Volta’s NAV was
€278.3m or €7.61 per share. The GAV stood at €311.4m.
*It should be noted that approximately 13.0% of
Volta’s GAV comprises investments for which the relevant NAVs as at
the month-end date are normally available only after Volta’s NAV
has already been published. Volta’s policy is to publish its own
NAV on as timely a basis as possible in order to provide
shareholders with Volta’s appropriately up-to-date NAV information.
Consequently, such investments are valued using the most recently
available NAV for each fund or quoted price for such subordinated
note. The most recently available fund NAV or quoted price was for
5.1% as at 30 September 2019 and for 7.9% as at 29 November
2019.
** “performances” of asset classes are
calculated as the Dietz-performance of the assets in each bucket,
taking into account the Mark-to-Market of the assets at period
ends, payments received from the assets over the period, and
ignoring changes in cross currency rates. Nevertheless, some
residual currency effects could impact the aggregate value of the
portfolio when aggregating each bucket.
CONTACTS
For the Investment ManagerAXA
Investment Managers ParisSerge Demayserge.demay@axa-im.com+33 (0) 1
44 45 84 47
Company Secretary and
AdministratorBNP Paribas Securities Services S.C.A,
Guernsey Branch guernsey.bp2s.volta.cosec@bnpparibas.com +44
(0) 1481 750 853
Corporate Broker Cenkos Securities plc Andrew
WorneDaniel BalabanoffRob Naylor+44 (0) 20 7397 8900
***** ABOUT VOLTA FINANCE
LIMITED
Volta Finance Limited is incorporated in
Guernsey under The Companies (Guernsey) Law, 2008 (as amended) and
listed on Euronext Amsterdam and the London Stock Exchange's Main
Market for listed securities. Volta’s home member state for the
purposes of the EU Transparency Directive is the Netherlands. As
such, Volta is subject to regulation and supervision by the AFM,
being the regulator for financial markets in the Netherlands.
Volta’s investment objectives are to preserve
capital across the credit cycle and to provide a stable stream of
income to its shareholders through dividends. Volta seeks to attain
its investment objectives predominantly through diversified
investments in structured finance assets. The assets that the
Company may invest in either directly or indirectly include, but
are not limited to: corporate credits; sovereign and
quasi-sovereign debt; residential mortgage loans; and, automobile
loans. The Company’s approach to investment is through vehicles and
arrangements that essentially provide leveraged exposure to
portfolios of such underlying assets. The Company has appointed AXA
Investment Managers Paris an investment management company with a
division specialised in structured credit, for the investment
management of all its assets.
*****
ABOUT AXA INVESTMENT
MANAGERSAXA Investment Managers (AXA IM) is a multi-expert
asset management company within the AXA Group, a global leader in
financial protection and wealth management. AXA IM is one of the
largest European-based asset managers with 739 investment
professionals and €750 billion in assets under management as of the
end of March 2019.
*****
This press release is published by AXA
Investment Managers Paris (“AXA IM”), in its capacity as
alternative investment fund manager (within the meaning of
Directive 2011/61/EU, the “AIFM Directive”) of Volta Finance
Limited (the "Volta Finance") whose portfolio is managed by AXA
IM.
This press release is for information
only and does not constitute an invitation or inducement to acquire
shares in Volta Finance. Its circulation may be prohibited in
certain jurisdictions and no recipient may circulate copies of this
document in breach of such limitations or restrictions. This
document is not an offer for sale of the securities referred to
herein in the United States or to persons who are “U.S. persons”
for purposes of Regulation S under the U.S. Securities Act of 1933,
as amended (the “Securities Act”), or otherwise in circumstances
where such offer would be restricted by applicable law. Such
securities may not be sold in the United States absent registration
or an exemption from registration from the Securities Act. Volta
Finance does not intend to register any portion of the offer of
such securities in the United States or to conduct a public
offering of such securities in the United States.
*****
This communication is only being
distributed to and is only directed at (i) persons who are outside
the United Kingdom or (ii) investment professionals falling within
Article 19(5) of the Financial Services and Markets Act 2000
(Financial Promotion) Order 2005 (the “Order”) or (iii) high net
worth companies, and other persons to whom it may lawfully be
communicated, falling within Article 49(2)(a) to (d) of the Order
(all such persons together being referred to as “relevant
persons”). The securities referred to herein are only available to,
and any invitation, offer or agreement to subscribe, purchase or
otherwise acquire such securities will be engaged in only with,
relevant persons. Any person who is not a relevant person should
not act or rely on this document or any of its contents. Past
performance cannot be relied on as a guide to future
performance.
*****This press release
contains statements that are, or may deemed to be, "forward-looking
statements". These forward-looking statements can be identified by
the use of forward-looking terminology, including the terms
"believes", "anticipated", "expects", "intends", "is/are expected",
"may", "will" or "should". They include the statements regarding
the level of the dividend, the current market context and its
impact on the long-term return of Volta Finance's investments. By
their nature, forward-looking statements involve risks and
uncertainties and readers are cautioned that any such
forward-looking statements are not guarantees of future
performance. Volta Finance's actual results, portfolio composition
and performance may differ materially from the impression created
by the forward-looking statements. AXA IM does not undertake any
obligation to publicly update or revise forward-looking
statements.
Any target information is based on
certain assumptions as to future events which may not prove to be
realised. Due to the uncertainty surrounding these future events,
the targets are not intended to be and should not be regarded as
profits or earnings or any other type of forecasts. There can be no
assurance that any of these targets will be achieved. In addition,
no assurance can be given that the investment objective will be
achieved.
The figures provided that relate to past
months or years and past performance cannot be relied on as a guide
to future performance or construed as a reliable indicator as to
future performance. Throughout this review, the citation of
specific trades or strategies is intended to illustrate some of the
investment methodologies and philosophies of Volta Finance, as
implemented by AXA IM. The historical success or AXA IM’s belief in
the future success, of any of these trades or strategies is not
indicative of, and has no bearing on, future results.
The valuation of financial assets can
vary significantly from the prices that the AXA IM could obtain if
it sought to liquidate the positions on behalf of the Volta Finance
due to market conditions and general economic environment. Such
valuations do not constitute a fairness or similar opinion and
should not be regarded as such.
Editor: AXA INVESTMENT MANAGERS
PARIS, a company incorporated under the laws of France, having its
registered office located at Tour Majunga, 6, Place de la Pyramide
- 92800 Puteaux. AXA IMP is authorized by the Autorité des Marchés
Financiers under registration number GP92008 as an alternative
investment fund manager within the meaning of the AIFM
Directive.
*****
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