Ranger DLF (RDL) investment analysis

Ranger Direct Lending Fund (RDL) is an interesting situation in the distressed situation with decent underlying assets mould. They basically buy exposures from peer to peer and other direct lenders.

What is interesting is this:

Current Assets £48.78 mln

less debt   £3.23 mln

Net £45.55 mln

Versus market cap of £129.31 million

That doesn’t look so good leaving a shortfall of £83.76 mln, but then when I look at the Fixed assets I get to Fixed Investments (i.e. the fund assets) of £183.3 million.

Now if I take the 83.76 “shortfall” and compare to the book value of investments of £183.3 mln I can then see that I have a breakeven valuation on those assets of 45.6 cents in the dollar.

Now I’m not assuming the historic book value of those investments is par, but if the value is significantly above 45.6% of par I’m in good shape.

There have been a few issues with some of the exposures in the portfolio for sure, but the last reported NAV I have is 963.3 pence per share. 16.12 mln shares in issue x 963.3 pence gives a portfolio valuation of £155.28 mln.

To get the portfolio valuation price I need to ignore the net current assets mentioned above of £45.55 mln so I take that off the NAV number.

This leaves me with a Fixed Investments market valuation of £109.73 mln. Dividing this by the “shortfall” gives me a portfolio price of 59.9%, well above the breakeven price of 45.6%.

Conclusion

That seems a decent discount to NAV to me. Added to this the fact that known activist investors are picking up the shares gives me confidence that this discount to NAV wont be allowed to carry on forever, so I’m in at a price of 811 pence.