We have known for quite some time that publicly listed funds were coming to the US but until recently we didn’t know when they would be made available. In June we learned that Stone Ridge was launching their fund under the ticker LENDX and last week we learned that RiverNorth had received approval for theirs.
The launch of publicly listed funds is an important marker for the marketplace lending industry. For the first time investors can access this asset class in a much easier way. In comparison public funds have been available in the UK for quite some time. We spoke with Philip Bartow, Portfolio Manager at RiverNorth and also dug into the prospectus to learn more.
The fund will be listed under the ticker RMPLX and will be available through several major fund platforms over the next few months. They can raise up to a billion dollars with the new fund although the initial investment will be lower with new investors coming in over time.
We also have an idea of the what platforms RiverNorth will initially be targeting. From the filing:
The Fund initially anticipates that a substantial portion of its Marketplace Loan investments will have originated from a limited number of platforms and that it may invest 25% or more of its Managed Assets in Marketplace Loans originated from each or any of LendingClub, Prosper and SoFi Lending Corp. The Fund may, in the future, invest 25% or more of its Managed Assets in Marketplace Loans originated from another or other platform(s).
The fund structure is setup as an interval fund and there will be a NAV that is priced each day. Investing is similar to that of an open ended fund as investors can purchase at the NAV price on any day, but the liquidity is similar to that of a private fund. Liquidity is offered quarterly and the total redemption amount will vary from 5% – 25% of the fund as determined by the board of directors based on market conditions, liquidity of the fund’s assets and shareholder servicing considerations.
As an interval fund, the Fund has adopted a fundamental policy to conduct quarterly repurchase offers for at least 5% and up to 25% of the outstanding Shares at NAV…The Fund will not otherwise be required to repurchase or redeem Shares at the option of a Shareholder. It is possible that a repurchase offer may be oversubscribed, in which case Shareholders may only have a portion of their Shares repurchased.
The fund also intends to use leverage. From the filing:
The Fund currently intends to use leverage for investment and other purposes, such as for satisfying repurchase requests or to otherwise provide the Fund with liquidity. Under the 1940 Act, the Fund may utilize leverage through the issuance of preferred stock in an amount up to 50% of its total assets and/or through borrowings and/or the issuance of notes or debt securities (collectively, “Borrowings”) in an aggregate amount of up to 33-1/3% of its total assets.