According to the firm’s annual report, while the directors’ policy is to permit borrowings of up to 50% of the company’s net asset value, a decision was made on the back of both the growing administrative burden of AIFMD compliance and the growing size of its unquoted investment in Lindsell Train Limited.
Lindsell Train chair, Donald Adamson, said the firm had not anticipated its risk adjusted NAV would exceed the €100m level so quickly. This is the level at which the company would have to apply change its status from a small registered Alternative Investment Fund Manager (‘AIFM’) to full registration, or stop all borrowing.
“This level was crossed soon after the beginning of 2015 and the directors have decided to adopt the latter course,” Adamson said, adding: “Although the Company has had modest borrowings in its early years both the Manager and the Directors consider that the Company is exposed to significant investment risks already – especially given the large holding in LTL – without borrowing increasing risk even further.”
