TIDMHSLE
RNS Number : 4390T
HarbourVest Senior Loans Europe Ltd
19 November 2013
HARBOURVEST SENIOR LOANS EUROPE LIMITED
INTERIM MANAGEMENT STATEMENT
HarbourVest Senior Loans Europe Limited (the "Company") is
publishing this Interim Management Statement in accordance with DTR
4.3 of the FCA Handbook.
This Interim Management Statement has been produced solely to
provide additional information to shareholders as a body to meet
the relevant requirements of the UK Listing Authority's Disclosure
and Transparency Rules. It should not be relied upon by any other
party or for any other purpose. The Statement has not been
audited.
This Interim Management Statement relates to the period from 01
July 2013 to 18 November 2013, unless otherwise stated. Throughout
this statement the Group refers to the Company and its wholly-owned
Luxembourg subsidiaries.
Investment Policy & Objective
The Company's investment objective is to provide shareholders
with a combination of a high level of income and capital growth
over time, whilst preserving capital. The investment period of HSLE
has now concluded and the Company has invested in accordance with
its original investment policy and objective. The Company has
invested in senior secured loans of private equity-backed European
mid-market companies.
These loans include amortising debt (i.e. loans that are repaid
over the life of the loan) as well as term debt (i.e. loans that
are repaid at maturity) and other forms of credit facility (e.g.
loans drawn over time and repaid over the life of the loan or at
maturity). All of the loans in which the Company has invested are
in the senior secured tier of a borrower's debt capital structure
(i.e. loans with first ranking security over the borrower's assets
and/or its shares). The Company did not buy distressed loans.
Manager Review
The period to September was strong for equity and credit
markets. Leveraged finance assets, including senior loans and high
yield, performed robustly over the period (Credit Suisse Western
European High Yield Index and S&P European Leveraged Loan Index
up 3.68% and 3.03%, respectively over the third quarter of 2013).
Markets were primarily buoyed by accommodative monetary policies
and quantitative easing measures put in place globally. Otherwise,
European macroeconomic conditions remained subdued despite showing
initial signs of stabilization. Overall investment remained low
over the period given the limited need to add capacity, public
spending remained limited and in reduction mode everywhere, and
credit conditions remained restrictive. Periphery countries such as
Spain exited recession but experienced severe drops in consumption
levels which, coupled with a relatively strong euro, affected the
ability of core countries such as Germany, which showed muted
growth numbers over the period, to export.
Over the third quarter of 2013 European leveraged loan volume
totalled EUR14.5 billion, down from EUR24 billion in the second
quarter and representing the lowest quarterly tally so far this
year as a result of weak activity in August and an average
September. In addition, the impact of cross-border transactions on
overall European institutional volume was felt, accounting for
EUR4.1 billion, or 48% in the third quarter (S&P Capital IQ
Leveraged Commentary and Data).
At 30 September 2013 the estimated Net Asset Value (NAV) of the
Company was 58.26 pence per share.
Investment Update
At 30 September 2013, the Company's portfolio consists of nine
loans comprising six primary transactions and three secondary loans
representing approximately GBP43.4 million and GBP18.6 million of
NAV respectively. At 30 September 2013 the NAV exposure was
approximately 38% to euro and 62% to Sterling. The weighted average
margin of the Company's portfolio is 451 basis points.
On a geographical basis the Company's loans, as measured by
their current value, provide exposure to the following countries:
the UK (50.5%), the Netherlands (25.1%), Germany (10.6%), Belgium
(7.4%) and Sweden (6.4%).
Outlook
Despite a challenging macro environment, HSLE has benefited from
a portfolio of loans to lowly leveraged companies, with loan to
value (LTV) ratios of approximately one-third, based on the
enterprise values (on a weighted average basis) of the borrowing
companies, and an above market spread per unit of leverage (SPL
approximately 213 basis points compared to a market average of 89
basis points) (source: Standard and Poor's Leveraged Commentary and
Data) at June 2013. There is still strong investor demand for yield
and an ongoing need for alternate sources of debt financing,
particularly as bank de-leveraging continues.
Material Events and Transactions
While the Company employs a buy-and-hold strategy, the
Investment Manager actively monitors the portfolio to achieve
liquidity or rebalance sector or company positions.
During July 2013, proceeds were received from the tenth
refinancing (which was completed in June). During August 2013,
proceeds of GBP13.6 million were received from the eleventh
refinancing, approximately five years ahead of the loan's maturity
date. These refinancings continue to highlight the attractiveness
of the assets in the portfolio.
Also in July, HSLE received fees related to a portfolio company
that amended its senior debt, primarily for acquisition purposes.
The maturity of the loan has been extended from 2016 to 2020.
Additionally, in October, one of the portfolio companies completed
an amendment of its loan facility to allow for a dividend payment
following strong performance.
Dividend and Capital Return
As a result of recent refinancing proceeds and capital
repayments, which in aggregate total approximately GBP18.5 million,
the Company announced a capital return to shareholders of 13.26
pence per share which was paid on 1 November 2013.
Including this capital return, capital returned to shareholders
since June 2012 totals 49.66 pence per share. Since 30 June 2012
about half of the portfolio has been refinanced or prepaid,
confirming the Company's ability to return capital. This is
particularly notable because HSLE focuses on the small and mid
market which is traditionally viewed as less liquid. This also
highlights the effective short average life of the portfolio
assets, a positive mitigant for duration risk.
During the period the Company also made a dividend payment of
1.12 pence per share on 30 September 2013. This brings total
ordinary share dividends since inception to 8.90 pence per
share.
Report and Accounts
The Company's Annual Report and Audited Annual Financial
Statements were made available to shareholders on 15 October
2013.
The Company's Half Yearly Report and Unaudited Condensed
Consolidated Financial Statements will be produced for the period
ended 31 December 2013 and will be distributed to shareholders
within two months of the period end.
Financial Highlights
The financial information for the period ended 18 November 2013
contained within this Interim Management Statement has not been
audited.
Other Notices
The Company intends to publish its estimated NAV per share as at
31 October 2013 on 21 November 2013. The estimated NAV per share as
at 30 November 2013 is due to be published on 20December 2013.
By order of the Board.
BNP Paribas Securities Services S.C.A, Guernsey Branch,
for and on behalf of HarbourVest Senior Loans Europe Limited as
Company Secretary
KEY DATA OVERVIEW
Weighted Average Maturity 2018
Current Portfolio Yield 4.93%
Weighted Average Margin 451 basis points
Key Metrics at 30 SEPTEMBER 2013
Net Assets GBP81.50m
Market Cap (total) GBP76.07m
Net Gearing 100
Share Price 54.38p
Net Asset Value 58.26p
(Discount)/Premium -6.67%
Share prices are official London Stock Exchange closing
prices.
Sources:
London Stock Exchange
Company's Administrator
HarbourVest Senior Loan Advisers L.P.
KEY INFORMATION
Fund Type Closed-ended Fund
Base Currency UK Sterling
ISIN GG00B4N5LG23
SEDOL B4N5LG2
Ticker HSLE
Bloomberg HSLE.LN
Reuters HSLE.L
AIC Sector Global High Income
Domicile Guernsey
NAV Frequency Monthly
Dividend Policy Semi-Annual
The commentary provided in this document is provided by the
Company's investment manager.
For the purposes of efficient portfolio management, the Company
has established one wholly-owned, Luxembourg incorporated
subsidiary, Orange Senior Loans 1 S.à.r.l. which in turn itself has
two wholly-owned, Luxembourg incorporated subsidiaries, Orange
Senior Loans 2 S.à.r.l., and Orange Senior Loans 3 S.à.r.l.
Together, the Company and its subsidiaries, which have been
incorporated for the purpose of holding primary and secondary loans
respectively, form the Group. All references to the Group in this
document refer to the Company and its wholly-owned Luxembourg
subsidiaries. This document is not intended to be an invitation to
engage in investment activity or a sales instrument; it constitutes
neither an offer nor an attempt to solicit offers for the
securities described herein. The report was prepared using
financial information contained in HSLE's books and records as of
the reporting date. This information is believed to be accurate but
has not been audited by a third party. This report describes past
performance, which may not be indicative of future results. The
opinions and
forecasts expressed herein are based on information which HSLE
and HarbourVest Senior Loan Advisers L.P. believe to be accurate
and reliable at the time of publication, however, these opinions
and forecasts may change without notice. The information contained
herein, including any expressions of opinion or forecast, is for
information purposes only and is given on the understanding that it
is not a recommendation and anyone who acts on it, or changes their
opinion thereon, does so entirely at their own risk. Neither HSLE
nor HarbourVest Senior Loan Advisers L.P. accept liability for
actions taken on the basis of the information provided.
This document may contain information obtained from third
parties, including ratings from credit ratings agencies such as
Standard & Poor's. Reproduction and distribution of third party
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Third party content providers do not guarantee the accuracy,
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including ratings, and are not responsible for any errors or
omissions (negligent or otherwise), regardless of the cause, or for
the results obtained from the use of such content. THIRD PARTY
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of opinions and are not statements of fact or recommendations to
purchase, hold or sell securities. They do not address the
suitability of securities or the suitability of securities for
investment purposes, and should not be relied on as investment
advice.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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