Can we have the actual numbers please Stuart@Assetzcapital
Apr 30, 2020 11:33:37 GMT
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Post by ian on Apr 30, 2020 11:33:37 GMT
In conjunction with associated threads - Posted below is an answer I gave to a question posed as regards expected returns in a doomsday scenario.
Please Stuart@Assetzcapital feel free to entirely discredit my post. However please do enlighten us, and populate the post with actual numbers, so investors can estimate the maximum level of investment that they should have in the Access accounts to ensure; in a doomsday scenario, they receive a 100% of their capital back. It may actually prompt investment.
Question was - What is the expected loss with £200k invested in the QAA.
Answer - I will attempt to answer this, as objectively as I can, worst case scenario (with explanations of my reasoning) - Note this only applies to the access accounts. I would hope Stuart@assetzcapital will populate my assumptions with proper numbers.
Generally I would imagine the average LTV is booked @ circa 60% so one might imagine there is a good 10% headroom should things go wrong.
* That said if I take the example of defaulted loan #330 - Potential value upon completion - £1.8m - £1.95m valued @ £1.25m. Assetz lent £960k 54% LTV. £583k 32.4% was recovered.
So assuming average LTV is 60% - if there are questionable valuations & admin fees, let’s assume 50% of Equity is recoverable: 30%; assuming average 60% LTV, so 50% of your £200k = £100k.
I add 2 major caveats 1. These are not normal market circumstances, and 2. This assumes recovery is distributed fairly and pro-rata to your investment.
Please let me now explain how your 50% payout / £100k may become significantly less.
Please bear with me :-
These are huge assumptions (Again I urge Stuart who will have already modelled this, to please populate with real numbers & share it with us)
Loan book is circa £400m - 50% of funding comes from 2 to 5 institutional investors investing collectively circa £200m. If institutional investors don’t have priority; that is a huge if; we can their ignore influence on the access accounts.
There are probably about 20,000 ‘non active’ investors with average circa 1k invested.
Let’s assume there are circa 5000 active retail investors (based on forbearance vote) investing on average £35k each. £200m of loans largely funded by circa 5000 active investors - probably 500 investors with over £100k (ave £150k); 1000 investors with over £50k (ave £75k); 1000 investing between £50k & £10k (ave £20k) with the balance of 2500 investors holding on average £2.5k.
If the prorata withdrawals were in play or the company was in administration you would get 50% of your money £100k.
However under the present prejudicial system, which unfairly discriminates against larger investors like you, you would see in time; (IF my numbers anywhere near the mark) on an equal pay out, with all investors equally invested in each of the 3 access accounts; Investors with circa less than £50k get all their money back. At that point, the money will run out and further payments to larger investors like you will cease. Most investors (numerically) will get a 100% return - you might receive circa 25% of your £200k investment.
Some investors may believe, as Assetz management probably do, that larger investors are wealthier than smaller investors, and they should subsidise smaller investors. That’s not necessarily correct. I may be worth £50m, largely invested in property & equites. I have 5 accounts with £20k in each in them. A pensioner who can’t afford a BTL and doesn’t trust the stock market, may have invested £100k in one account (40% of his life savings) I will get out ok - they will lose 50% of their money!
Please be assured this assumes 100% defaults, a doomsday scenario. The administrators would be likely to be called in prior to this, and whilst they will bleed the pot dry, they will replace discriminatory withdrawal system, with a pro rata process. That said those with over £100k invested like you may be best served investing a few thousand in legal fees in order to attempt to get AC to cease discriminatory payments??
Please Stuart@Assetzcapital feel free to entirely discredit my post. However please do enlighten us, and populate the post with actual numbers, so investors can estimate the maximum level of investment that they should have in the Access accounts to ensure; in a doomsday scenario, they receive a 100% of their capital back. It may actually prompt investment.
Question was - What is the expected loss with £200k invested in the QAA.
Answer - I will attempt to answer this, as objectively as I can, worst case scenario (with explanations of my reasoning) - Note this only applies to the access accounts. I would hope Stuart@assetzcapital will populate my assumptions with proper numbers.
Generally I would imagine the average LTV is booked @ circa 60% so one might imagine there is a good 10% headroom should things go wrong.
* That said if I take the example of defaulted loan #330 - Potential value upon completion - £1.8m - £1.95m valued @ £1.25m. Assetz lent £960k 54% LTV. £583k 32.4% was recovered.
So assuming average LTV is 60% - if there are questionable valuations & admin fees, let’s assume 50% of Equity is recoverable: 30%; assuming average 60% LTV, so 50% of your £200k = £100k.
I add 2 major caveats 1. These are not normal market circumstances, and 2. This assumes recovery is distributed fairly and pro-rata to your investment.
Please let me now explain how your 50% payout / £100k may become significantly less.
Please bear with me :-
These are huge assumptions (Again I urge Stuart who will have already modelled this, to please populate with real numbers & share it with us)
Loan book is circa £400m - 50% of funding comes from 2 to 5 institutional investors investing collectively circa £200m. If institutional investors don’t have priority; that is a huge if; we can their ignore influence on the access accounts.
There are probably about 20,000 ‘non active’ investors with average circa 1k invested.
Let’s assume there are circa 5000 active retail investors (based on forbearance vote) investing on average £35k each. £200m of loans largely funded by circa 5000 active investors - probably 500 investors with over £100k (ave £150k); 1000 investors with over £50k (ave £75k); 1000 investing between £50k & £10k (ave £20k) with the balance of 2500 investors holding on average £2.5k.
If the prorata withdrawals were in play or the company was in administration you would get 50% of your money £100k.
However under the present prejudicial system, which unfairly discriminates against larger investors like you, you would see in time; (IF my numbers anywhere near the mark) on an equal pay out, with all investors equally invested in each of the 3 access accounts; Investors with circa less than £50k get all their money back. At that point, the money will run out and further payments to larger investors like you will cease. Most investors (numerically) will get a 100% return - you might receive circa 25% of your £200k investment.
Some investors may believe, as Assetz management probably do, that larger investors are wealthier than smaller investors, and they should subsidise smaller investors. That’s not necessarily correct. I may be worth £50m, largely invested in property & equites. I have 5 accounts with £20k in each in them. A pensioner who can’t afford a BTL and doesn’t trust the stock market, may have invested £100k in one account (40% of his life savings) I will get out ok - they will lose 50% of their money!
Please be assured this assumes 100% defaults, a doomsday scenario. The administrators would be likely to be called in prior to this, and whilst they will bleed the pot dry, they will replace discriminatory withdrawal system, with a pro rata process. That said those with over £100k invested like you may be best served investing a few thousand in legal fees in order to attempt to get AC to cease discriminatory payments??
