Eppley prepared to navigate uncertain environment amid COVID-19
Managing Director of Eppley Limited, Nicholas Scott.
Investment group Eppley Limited has indicated that is prepared to navigate the uncertain market environment caused by the spread of the novel coronavirus (COVID-19).
Noting that it is operating from a “position of strength”, Eppley said the impact of the coronavirus will be mitigated by several steps it has taken over the years to make the business to any shock.”
“Our portfolio is healthy, diversified and has been carefully underwritten. We own investments across multiple asset classes many of which like real estate, infrastructure and secured loans and leases are defensive,” management said Eppley’s recently released annual report.
In a letter to shareholders that preceded the annual report, management added, “Our counterparties are mostly large, prominent firms and we are not heavily exposed to any one industry, including tourism.”
The report said Eppley’s asset management business “provides a stable stream of recurring earnings largely insulated from credit, market or liquidity risks.
“For example, we estimate that in 2020 we could substantially cover our entire finance costs with our fee income alone.”
Management said the company is “well-capitalized”.
“We have more equity relative to our assets than other lenders like commercial banks on average. This is even more true considering that our asset management business is recorded on our balance sheet at its historical cost and not its economic value which is significantly higher.”
Eppley produced earnings per share of $0.85 in 2019, a 26.5 per cent return for shareholders.
The company produced compounded average annual returns to shareholders of over 35 per cent as a public company.
At the end of 2019, its investment portfolio was $3.8 billion and the average return on our portfolio was 12 per cent.
The report said the focus in 2020 will be on navigating the landscape created by COVID 19 and “preparing to seize opportunities as they emerge.”
“With considerable dry power in our funds and on our balance sheet we expect to put significant capital to work as we react to these conditions,” it was stated.