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JP Morgan Private Equity In $150M Credit Facility With Lloyds
Mar 10, 2011 07:55:50 (ET)
By Marietta Cauchi
Of DOW JONES NEWSWIRES
LONDON (Dow Jones)--JP Morgan Private Equity on Thursday said it has secured a new $150 million credit facility with Lloyds Banking Group (LYG), effectively refinancing its existing $100 million facility with Fortress Credit Corp.
The facility comes at a competitive rate--it works out at around 3% compared with the 4.5%-5% offered by other lenders," JPEL co-portfolio manager Gregory Getschow told Dow Jones Newswires.
Lloyds, which inherited the private-equity lending business on its merger with HBOS, is one of only a few banks still prepared to lend against private equity interests, Getschow added.
The funding will be used to make investments as well as satisfy unfunded commitments. JPEL purchases private equity fund interests in the secondary market, buying stakes in smaller and midmarket buyout funds private equity funds from existing investors, and has a promising pipeline of opportunities.
"We have a strong pipeline of potential deals in Asia as well as the U.S. and Europe," Getschow said. "We are seeing plenty of restructuring interests in Europe while we are buying senior debt--often at significant discounts--in the U.S."
Like the majority of listed private equity vehicles, JPEL trades at a discount to its net asset value, but its 14% discount is considerably less than the industry average, which is around 32%. At 1250 GMT, JPEL shares were up 1 cent, or 0.6%, at $1.09 and its estimated NAV $1.27 a share.
The reason for the discount is that private equity funds give their investors valuations of their portfolio companies on a quarterly or half-yearly basis. But the listed private equity companies that invest in those funds are traded on a daily basis--so there will be a time lag for the good news to feed through to the public markets.
"The main problem is lack of activity in the market--less deals means less trading in the shares--but we are holing to see more come in," Getschow said.
Even so, the company is looking to boost its share price and is considering the payment of dividends on the basis that investment companies with a high and stable dividend yield have been shown to trade at much tighter discounts or even premiums.
In November, JPEL also re-instigated its strategy, on hold for a year, with a tender offer to buy up to 3% of shares outstanding at NAV--another strategy aimed at boosting a company's share price.
While many other listed private equity companies have repurchased or bought back shares in the market, JPEL is the only one to offer such a tender facility that buys shares directly from investors.
-By Marietta Cauchi, Dow Jones Newswires; +44 207 842 9241; marietta.cauchi@dowjones.com
(END) Dow Jones Newswires
March 10, 2011 07:55 ET (12:55 GMT)
