TFG Tetragon Financial Group Limited

TIDMTFG

Tetragon Financial Group Limited

30 August 2022

London, UK, 30 August 2022

Edison issues review on Tetragon Financial Group (TFG)

Tetragon Financial Group's (Tetragon's) NAV declined 3.5% in H122 in total return terms, compared to a 20% fall in the MSCI ACWI Index (based on Refinitiv). The portfolio revaluation contributed 4.1pp to the decline, which was mostly due to a Q122 loss on Tetragon's direct exposure to a publicly quoted biotech company and the downward revaluation of Equitix on the back of public multiples contraction. The best-performing assets in the portfolio were collateralised loan obligations (CLOs, which also assisted the valuation of the CLO manager LCM). Tetragon's NAV total return was also supported by a NAV-accretive share repurchase (+3pp on NAV). Tetragon's one-year NAV performance to end-June 2022 stands at 10%, compared to a 15% decrease in the MSCI ACWI (based on Refinitiv).

At end-June 2022, Tetragon had cash commitments of US$96.5m, which are fully covered by the undrawn part of its credit facility (US$150m). The facility has been enlarged recently to US$400m from US$250m, with the drawn part translating into net gearing at 3.7% of NAV at end-June 2022. We also note that Tetragon receives recurring cash inflows from bank loan investments and TFG Asset Management, with a five-year average of US$115m and US$69m pa, respectively. Tetragon's average costs excluding incentive fees stood at US$49m pa over the last five years. In H122, Tetragon used US$42m for share repurchases close to market price and paid US$19.2m in dividends and we calculate that the latest dividend per share (DPS) of US$0.11 (up 10% y-o-y) implies a 4.3% yield, according to our calculations.

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August 30, 2022 03:37 ET (07:37 GMT)

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