US alternative lender Victory Park Capital is to launch an initial public offering (IPO) of ordinary shares on the London Stock Exchange targeting gross proceeds of £200 million (€272.8 million; $309.8 million), the firm announced. However, the issuance could be increased to a maximum of £250 million if there is greater demand for the firm’s stock.
Proceeds from the listed vehicle will be invested in opportunities within the specialty lending market, primarily through online lending platforms, or peer-to-peer and marketplace lenders as they are otherwise known.
A prospectus for VPC Specialty Lending Investments will be published and the issue opened on or around 26 February. It is expected to be closed on 12 March 2015.
Chicago-headquartered VPC, investment manager of the vehicle, is listing the vehicle in London because of the availability of liquidity in the UK, the breadth and depth of institutions in the UK for a company of this size and the sell-side analyst interest, a spokeswoman for VPC explained to PDI.
Increased bank regulation has restricted traditional lending methods and has led to a growing market for speciality lending platforms, VPC said in the announcement.
“VPC Specialty Lending Investments provides investors with access to an established and successful business and brand through its Investment Manager Victory Park Capital. The company is targeting an attractive total return for shareholders comprising of dividend income and capital growth in this highly attractive and fast growing asset class,” Brendan Carroll, partner and co-founder of Victory Park Capital, commented in a statement.
The vehicle is targeting a net dividend yield of 8 percent and a net total return in excess of 10 percent per annum, once the proceeds of the issue are fully invested. VPC is targeting to be substantially fully invested within six months of the admission, based on several existing relationship and platform agreements with multiple online platforms providing scalable access.
VPC has been involved in specialty lending since 2010 and within that time made $1.7 billion of investments and commitments across 12 specialty finance platforms. It has generated an aggregate gross return on invested capital of 24 percent, as of 30 September 2014, it said.
Last week, VPC announced it would lend up to $420 million via UK-based marketplace lender Funding Circle, on top of an existing $92 million facility provided in 2014. Last month, VPC also said it was investing up to £150 million in UK peer-to-peer business Assetz Capital.
Since 2010, VPC estimates that specialty lending has grown in the US from a market of around $0.2 billion of loans to consumers and small business, to nearly $7 billion by 2014.
Jefferies International is acting as sole broker, sponsor and bookrunner to the issue.