Pollen Street Group Limited · LSE:POLN
Pollen Street — Investor Presentation (July 2020)
24 slides from Pollen Street's investor presentation, July 2020
Slide 1: Pollen Street Honeycomb analyst presentation
Private & Confidential. © Pollen Street 2020
Slide 2: Investment highlights
Credit investments secured on portfolios of loans with first loss protections and/or hard asset security providing strong downside protections Typically own the senior part of the capital structure from “dollar zero” so low losses even on default Limited refinancing risk as assets generate sufficien
Slide 3: Investment criteria and sector map
Secured by Consumer, loans or hard SME and Structured and £10m - £75m assets Property Whole loan Europe UK Consumer SME RE Other Prime consumer Credit cards Car finance ST / Working capital Merchant cash advance SME term loans Point of sale finance Non-conforming consumer NPLs Asset finance Leasing
Slide 4: Structured lending approach and downside protection
Advance rate typically 0 to 60-80% Structured to typically withstand 3x increase in defaults Only lend against performing loans Comprehensive covenant suite Focus on loans with hard asset backing and subordinated borrower equity; or Structurally enhanced loans with credit enhancement through earn ou
Slide 5: Owning the senior capital structure from dollar zero
Granularity of the portfolio Historic consistency of performance 1Source: Bloomberg Excess spread Own the senior capital structure from “dollar zero” and therefore have lower LGD Owning the senior capital structural results in amortisation in crisis Granular information on the underlying collateral
Slide 6: Credit investment team
Head of Structured Portfolio Investment Investment Investment Partner Lending Director Director Director Director Investment Investment Investment Investment Investment Investment Director Director Director Manager Manager Manager Senior Senior Associate Associate Associate Associate CFO Partner Gen
Slide 7: Prism data platform for loan-level monitoring
Structured Facilities Borrower 1 Directly integrated into borrowers Borrower 2 File Granular loan-by-loan data on underlying assets Transfer Borrower 3 Data received on a daily or monthly basis Secure Comprises over 1bn rows of data across more than Borrower x Automated Data Data Loaders 600,000 ind
Slide 8: Ongoing monitoring and review process
Management account review Loan performance review Covenant calculation and compliance Regular third party audits (3-6 months) on borrowing base, cash testing and covenant calculation Utilisation requests and distribution certificates reviews Monthly management meetings General market monitoring Priv
Slide 9: Pollen Street
POLLEN @ STREET
Slide 10: Asset NAV by platform: structured
% of Total Number of loans / Asset NAV by Platform Structure Asset NAV (£m) LTV2 Portfolio receivables Structured 1 Structured 41 7.3% 56% 35 Structured 2 Structured 14 2.4% 63% 71 Strucuted Other Structured 3 0.6% n/a n/a Stuctured Property 58 10.3% Structured 3 Structured 50 9.0% 52% 102,364 Struc
Slide 11: Structured facility examples
• Advance Rate 80% against outstanding balance of performing loans. Provider of short term small balance loans to SMEs with personal guarantees. • Part of a syndicated facility with two other banks Senior secured facility secured on SME loans. • IWOCA provide 20% ‘cash equity’ in the Developed propr
Slide 12: Asset NAV by platform: whole loans
% of Total Number of loans / Asset NAV by Platform Structure Asset NAV (£m) LTV2 Portfolio receivables Whole Loan 1 Unsecured 85 15.3% na 20,492 Whole Loan Other Unsecured 5 0.9% Whole Loan Consumer 90 16.2% Whole Loan 21 Real Estate Backed 43 7.8% 50% 6,535 Whole Loan 3 Real Estate Backed 38 6.8% 5
Slide 13: Recent portfolio acquisitions
Acquisition of two portfolios of commercial mortgages secured Acquisition of portfolio of well seasoned second charge against mixed use properties at a net purchase price of c.£41m, mortgages originated between 2003 and 2010 reflecting 77% of outstanding principal balance. Significant downside prote
Slide 14: Portfolio performance
2 250 25.0% 200 20.0% 150 15.0% 100 10.0% 50 5.0% 0 0.0% Weighted Average Consumer - Unsecured Consumer - Secured Weighted Average Consumer - Unsecured Consumer - Secured Consumer - Receivables SME Consumer - Receivables SME 140 120 100 80 60 40 20 0 Weighted Average Consumer - Unsecured Consumer -
Slide 15: Pollen Street
POLLEN @ STREET
Slide 16: NAV performance since inception
40% 35% 30% 25% 20% 15% 10% 5% 0% Dec-15 Jun-16 Dec-16 Jun-17 Dec-17 Jun-18 Dec-18 Jun-19 Dec-19 1. Performance since inception through to 31st May 2020 Past performance is no indication of future results. Private & Confidential 16
Slide 17: Net investment assets, leverage and NAV return
600 60% Net Investment Assets (£m) 580 Significant cash generation driven by structural benefits of 560 55% strategy (small balance, amortising and short duration loans) Debt to Equity Ratio (%) 540 50% PSC has restricted originations during COVID leading to reduction 520 in assets from £595m to £56
Slide 18: Results for March to May 2020
April and May 2020 performance has been 3 Months March - May 3 Months March - May 2019 2020 robust given the unprecedented macro economic conditions Investment Yield 15.7 15.0 The results include: Impairments and Write Offs (1.9) (1.6) – The build up of a COVID provision in anticipation of potential
Slide 19: Provisioning approach and COVID overlay
The Company’s provisioning models incorporate forward looking macro economic estimates. To reflect the worsening outlook we changed the weighting of the existing 2019 economic scenarios from 30/40/30 upside/base/downside to 100% downside. In addition to the impact of economic scenarios, we have cons
Slide 20: Conclusion
» CONCLUSION ) ASSET-BACKED DIRECT LENDING PREMIUM RETURNS WITH STRONG & RESILIENT INCOME SUSTAINABLE, SCALABLE INVESTMENT STRATEGY POLLEN STREET Private & Confidential 20
Slide 21: Contact details
Managing Partner +44 20 3728 6746 [email protected] Partner +44 20 3728 6747 [email protected] Partner, Investor Relations +44 20 75090421 [email protected] Private & Confidential 21
Slide 22: Pollen Street
POLLEN @ STREET
Slide 23: Important information
This confidential presentation (the “Presentation”) is provided for discussion purposes only and is not, and may not, be relied on in any manner as legal, tax, investment or accounting advice. This Presentation does not constitute an offer document or an offer of transferable securities to the publi
Slide 24: Important information (continued)
Statements in this Presentation are as of the date listed on the cover page unless stated otherwise, and the delivery of this Presentation shall not under any circumstances create an implication that the information contained herein is correct as of any time after such date. The information provided
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