The information in this announcement is restricted and is not for publication, release or distribution, in whole or in part, directly or indirectly, in or into or from, the United States, Canada, Australia, the Republic of South Africa, the Republic of Ireland or Japan or their respective territories or possessions or any other jurisdiction where it is unlawful to distribute this announcement.

12 April 2019

TwentyFour Income Fund Limited
(the “Company”)

PUBLICATION OF PROSPECTUS AND CIRCULAR

The Board of TwentyFour Income Fund Limited announces a Placing, Offer for Subscription and Open Offer of up to 150 million New Ordinary Shares of 1p each in the Company and a Placing Programme of up to 150 million New Ordinary Shares of 1p each in the Company. The Board also announces the publication of a prospectus containing full details of the Issue, Placing Programme and the Admission to the Official List and trading on the London Stock Exchange’s main market for listed securities of New Ordinary Shares of 1p each (“Admission”) (the “Prospectus”). The Board have also published a circular convening an Extraordinary General Meeting to issue New Ordinary Shares on a non pre-emptive basis, to amend the Company’s investment policy and to change the Company’s articles of  incorporation.

The Board is launching the fundraise in response to ongoing demand and due to the Board and Portfolio Manager believing that there is a significant opportunity to deploy additional funds with favourable returns given prevailing market conditions. In relation to the opportunity, Ben Hayward of the Company’s Portfolio Manager, TwentyFour Asset Management LLP, comments:

“As the European ABS markets lagged wider fixed income and equity market volatility in 2018, the recovery in 2019 has similarly been behind the curve. This means that 2019 has presented an excellent credit spread environment opportunity, and with GBP LIBOR higher than it has been for most of the last five years, yields are attractive and any narrowing of the basis to mainstream fixed income would drive capital gains for investors. This is supported by strong and stable fundamental performance in most sectors for an asset class that has displayed low levels of correlation recently. We think this is an excellent time to raise capital.”

Current trading and prospects

Since launch the Company has delivered strong performance for Shareholders:

- the total return of the Shares (based on NAV) from launch to close of business on 11 April 2019, being the latest practicable date prior to the publication of the Prospectus was 62.8 per cent., or 8.3 per cent. per annum, which compares favourably with the Company’s target annual total return of between 6 and 9 per cent. per annum;

- the income return to Shareholders has been ahead of the Company’s targets at launch. The IPO Prospectus stated a target dividend of at least 5p per Ordinary Share in respect of the year to 31 March 2014 and at least 6p per Ordinary Share thereafter. The Company met these targets by paying dividends of 6.38p, 6.65p, 7.14p, 6.99p, 7.23p and 6.45p per Ordinary Share in respect of the periods ended 31 March 2014, 2015, 2016, 2017, 2018 and 2019 respectively*; and

- the Ordinary Shares have typically traded at a premium to NAV since launch, reflecting net demand in the market from a broad range of existing and new investors. The premium to NAV was 2.27 per cent. as at close of business on 11 April 2019, being the latest practicable date prior to the publication of the Prospectus.

The Company believes that UK and European ABS continue to offer attractive, risk-adjusted returns. Recent sentiment across fixed income has been affected by a number of negative events, including but not limited to Brexit, global trade wars, US rate changes, a potential slow-down in China and decrease in oil prices. This has led to more attractive yields in the European ABS market as prices have been supressed by a lower risk tolerance.

Fundamental performance has improved for the majority of transactions in the European ABS market, buoyed by a low interest rate environment, low inflation and improving employment, wage and housing data. This improved performance has not been matched across the board by lower yields on a consistent basis, and as such the Company believes that a better risk can yield a more attractive return.

The recent change in the rate environment in the US may be followed this year by a similar move in the UK. As the Company has a yield that is based on floating rate coupons, the Company’s yield can be expected to go up as the financial markets expect a higher rate environment.

The better yields available currently may pull in new investors when compared to historical yields and yields in other parts of fixed income, which could provide material capital gains in a recovering environment.

Importantly the strong performance of transactions is expected to continue with Fitch updating its cumulative lifetime loss rate predictions for European RMBS and ABS to 0.3 per cent. and 0.2 per cent. respectively.

The Issue

The Issue consists of a placing, an offer for subscription and an open offer of up to 150 million New Ordinary Shares which are being issued at the Issue Price.  The total number of New Ordinary Shares issued under the Placing, the Offer for Subscription and the Open Offer will be determined by the Company, Numis and the Portfolio Manager after taking into account demand for the New Ordinary Shares and prevailing economic and market conditions. 

The Placing and the Offer for Subscription will also provide existing Shareholders and new investors with an opportunity to subscribe for Issue Shares at the Issue Price. 

Investors will not be charged a fee in addition to their payment of the Issue Price in order to subscribe for New Ordinary Shares under the Issue, as the Issue Expenses will be met out of the proceeds of the Issue.

The Issue Price will be calculated as a price equal to a premium of 2 per cent. to the NAV per Ordinary Share calculated as at the close of business on Friday, 10 May 2019 as announced on Monday, 13 May 2019 and is expected to be announced by the Company through a Regulatory Information Service on or around 13 May 2019.

Further details of the calculation of the Issue Price are set out in Part 7 of the Prospectus.

The Prospectus sets out key information relating to the Company (Part 5), the investment opportunity (Part 6), and the Proposals (Part 7).

Circular

In order to facilitate the Issue and the Placing Programme the Company has convened an Extraordinary General Meeting in order to seek authority for the Directors to issue New Ordinary Shares on a non pre-emptive basis.

At the Extraordinary General Meeting it is also proposed that the Company’s investment policy be amended in order to enable the Portfolio Manager to maximise risk adjusted returns.

In particular, the Portfolio Manager wishes to have the ability to utilise borrowings for investment purposes, subject to a limit of 25 per cent. of the Company’s Net Asset Value at the time of drawdown (increased from the existing limit of 10 per cent.). The Portfolio Manager intends to use borrowings to finance opportunistic investments in specific market conditions where the Company is unlikely to be able to raise capital in the short term. The Portfolio Manager intends to use borrowings to enable the Company to invest in tranches of Asset Backed Securities, which may then, in the opinion of the Portfolio Manager, be attractively priced due to prevailing market circumstances.

The Portfolio Manager is also seeking to increase the proportion of the Portfolio that may be invested in instruments not deemed securities for the purposes of FSMA. While the Portfolio Manager’s preference continues to be to invest in bonds, the Portfolio Manager anticipates there being increased investment competition in the ABS sector in the coming years and is of the view that having a broader ability to invest by way of loan, where it judges such investment to be in the economic interest of the Company, will optimise its ability to achieve the Company’s investment objective going forward.

Finally, the Articles provide for a Realisation Opportunity under which Shareholders may elect to realise all or part of their holdings of Ordinary Shares at three yearly intervals. The next Realisation Opportunity will take place around the time of the 2019 AGM. The Directors have considered the structure of the 2019 Realisation Opportunity and have decided to put forward for Shareholder approval a proposal to change the Articles to (i) provide the Company with more flexibility with regard to the way in which it can deliver Realisation Opportunities for Shareholders; (ii) amend the borrowing powers of the Company; and (iii) make technical changes to enable the Articles to conform to Guernsey law, as currently in force and Guernsey and UK current best practice.

Expected Timetable of Principal Events

Notes:

(1)  References to time above and in the Prospectus generally are to London times unless otherwise specified.

(2)  All times and dates in the expected timetable and in the Prospectus may be adjusted by the Company.  Any changes to the timetable will be notified by RIS.

Dealing Codes

Prospectus

Further details of the Issue, Placing Programme and Admission are set out in the Prospectus, which will be available on the Company's website at www.twentyfourincomefund.com, and for as long as New Ordinary Shares are available for issue under this Prospectus, copies of this Prospectus are available for collection, free of charge from the offices of the Administrator.   A copy of the Prospectus will be submitted to the National Storage Mechanism and will be available for inspection at www.morningstar.co.uk/uk/NSM.

Unless otherwise defined, capitalised words and phrases used in this announcement shall have the meaning given in the Prospectus.

Contact details

For further information, please contact:

Numis Securities Limited       +44 (0)20 7260 1000
Hugh Jonathan
Nathan Brown

TwentyFour Income Fund Limited +44 (0)20 7015 8900
John Magrath
Alistair Wilson

Important Notice

This Announcement has been prepared for information purposes only, it is not a prospectus.  Recipients of this Announcement who are considering acquiring New Ordinary Shares in the Company in connection with the Issue and the Placing Programme are reminded that any such acquisition must be made only on the basis of the information contained in the Prospectus and any supplementary prospectus(es) thereto which may be different from the information contained in this Announcement.  This Announcement does not constitute or form part of and may not be construed as an offer to sell, or an invitation to purchase, investments of any description, nor as a recommendation regarding the possible offering or the provision of investment advice by any party.  No information in this announcement should be construed as providing financial, investment or other professional advice and each prospective investor should consult its own legal, business, tax and other advisers in evaluating any investment opportunity.  In particular, an investment in the Company involves a high degree of risk and prospective investors should read the section in the Prospectus entitled "Risk Factors" for further information.

Any data on past performance, modelling or back-testing contained herein is no indication as to future performance and there can be no assurance that targeted or projected returns will be achieved, that the Company will achieve comparable results or that the Company will be able to implement its investment strategy or achieve its investment objectives.  All opinions and estimates are given as of the date hereof and are subject to change.  The value of any investment may fluctuate as a result of market changes. 

Ordinary Shares have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the "Securities Act") or with any securities regulatory authority of any state or other jurisdiction of the United States and the New Ordinary Shares may not be offered, sold, resold, transferred or delivered, directly or indirectly, within the United States or to, or for the account or benefit of, U.S. Persons. There will be no public offer of the New Ordinary Shares in the United States. Subject to certain exceptions, the New Ordinary Shares are being offered and sold only outside the United States to persons who are not U.S. Persons in reliance on the exemption from registration provided by Regulation S under the Securities Act.

Moreover, the Company has not been and will not be registered under the Investment Company Act of 1940, as amended (the “Investment Company Act”) and investors will not be entitled to the benefits of the Investment Company Act. The New Ordinary  Shares and any beneficial interests therein may only be transferred in an offshore transaction in  accordance with Regulation S (i) to a person outside the United States and not known by the transferor to be a U.S. Person, by prearrangement or otherwise; or (ii) to the Company or a subsidiary thereof.

The distribution of this Announcement in certain jurisdictions may be restricted by law.  No action has been taken by the Company or Numis that would permit an offering of any Ordinary Shares or possession or distribution of this Announcement or any other offering or publicity material relating to such New Ordinary Shares in any jurisdiction where action for that purpose is required,.  Persons into whose possession this Announcement comes are required by the Company and Numis to inform themselves about, and to observe, such restrictions.

Certain statements in this Announcement are forward-looking statements which are based on the Company's expectations, intentions and projections regarding its future performance, anticipated events or trends and other matters that are not historical facts.  These statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements.  Given these risks and uncertainties, prospective investors are cautioned not to place undue reliance on forward-looking statements.  Forward-looking statements speak only as of the date of such statements and, except as required by applicable law, the Company undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

The information contained in this Announcement is subject to change without notice and neither the Company nor Numis assume any responsibility or obligation to update publicly or review any of the forward-looking statements contained herein.

This announcement contains inside information as defined under the market abuse regulation (eu) no. 596/2014.

* This is a target only and not a profit forecast and past performance is not a guide to future performance. There can be no assurance that this target will be met or that the Company will make any distributions at all. This target return should not be taken as an indication of the Company’s expected or actual current or future results. The Company’s actual return will depend upon a number of factors, including but not limited to the size of the Issue, the number of Ordinary Shares in respect of which Realisation Elections are made and the Company’s total expense ratio. Potential investors should decide for themselves whether or not the return is reasonable and achievable in deciding whether to invest in or retain or increase their investment in the Company. See further in the ‘‘Risk Factors’’ section of the Prospectus.