Staude Capital Ltd and Metage Capital Ltd on Monday sent an open letter to fellow investors in VPC Speciality Lending Investments PLC outlining an alternative proposal to a tender offer made in 2020.

VPC Speciality Lending is an investment company which provides asset-back lending to emerging and established businesses.

The letter stated that there is ‘strong and widespread support from independent shareholders for the introduction of a periodic 100% realisation opportunity, via a run-off share class.’

In June 2020 VPC Speciality Lending committed to a discount-dependent tender offer for 25% of the shares in issue immediately after the 2023 annual general meeting. However, the open letter states that ‘the discount on the company’s shares remains stubbornly wide.’

A discount in relation to net asset value occurs when an investment fund’s market trading price is lower than its daily net asset value. A discount often indicates that the market is generally bearish on the investments in the fund. A tender offer is a public solicitation to shareholders requesting they tender their stock at a specific price at a specific time.

The 100% realisation opportunity provides ‘the opportunity to receive returns of capital in the normal life cycle of the underlying investments’, Staude and Metage noted, rather than the chance to sell assets prematurely.

The letter states that this opportunity should be offered at least every fifth year to enable ‘shareholders to remain invested knowing that they have access to liquidity at net asset value in the future.’

This proposal, Staude and Metage said, would ‘allow shareholders to ultimately realise returns that are similar to the underlying net asset value performance and eliminates discount risk for longer-term investors.’

Staude and Metage are both long-term shareholders in the VPC Speciality Lending.

Staude and Metage engaged with other institutional and professional shareholders ‘who are independent of the company’s investment manager’ to put forward their ‘alternative consideration’.

The board of VPC Speciality Lending ‘actively engaged’ with the concerns. The company is expected to bring forward its own thoughts on the 2023 tender proposal.

Shares in VPC Speciality Lending were trading 6.0% higher at 80.57 pence each in London on Monday afternoon.

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