Ranger Direct shares end higher after giving in to pressure from activists to pull out
The share price of peer-to-peer lender Ranger Direct Lending closed up 1% on Monday after surrendering to demands to liquidate and return the money to shareholders, paving the way for the end of the the fierce battle with activist investors.
The £ 128million investment firm – whose major shareholders include Invesco’s Mark Barnett, Neil Woodford’s protégé – has come under intense pressure from Oaktree Capital Management and Lim Advisors in recent months. The activist investors, who collectively own nearly 30 percent of the company, have demanded a board reshuffle and a disbandment of Ranger Direct.
Its board of directors today proposed to terminate the company after its preferred candidate to manage the trust, Ares Capital Management, withdrew from the process. The council said this was due to the uncertain backdrop created by the activists.
“Given Ares’ decision, given that Ares was the preferred candidate and any other successor managers would face the same issues, the board concluded that in the interests of certainty and protection of value For the shareholder, the company should undertake to realize its assets in an orderly manner, ”he said.
But Ranger’s board urged shareholders to vote against the directors appointed by Oaktree and Lim.
The trust was created to tap into expected demand for peer-to-peer loans, where investors lend money directly to subprime borrowers in exchange for a higher rate of return. But the industry has struggled, with lenders such as Collateral put under administration and others warning that loan defaults are higher than expected. Ranger Direct Lending’s share price has fallen by more than a fifth since its launch in 2015.
An Oaktree spokesperson welcomed the proposed phase-down. “We are pleased that the strong shareholder support for the change in the board of directors has led Ares to withdraw its proposal and that the board is finally coming to the conclusion that the orderly realization of the company’s assets is the best way to protect shareholder value.
“It is now perfectly clear, in our view, that shareholders need and deserve new independent representation on the board.”