In this report, we highlight what Volta Finance Limited (LON:VTA) brings to investors. In particular, we note the multi-currency, liquid access it provides all investors to i) the illiquid but attractive CLO (private credit) market, with its good risk-adjusted returns, ii) an outperforming manager of that expertise-dependent asset class. Private credit has been one of the “hot” asset classes in 2025 but with investment largely restricted to large, institutional investors. Volta’s AEX and LSE, and € and £, listings give retail investors liquidity to that market. Volta also offers investors portfolio diversification, and a high, covered, dividend yield.
- Portfolio diversification: Volta Finance’s total returns have no correlation with benchmark bond indices. Over the long term, it has outperformed UK and European markets; and, by providing investors with more stable dividend income, and less volatile capital gains, it also provides diversification.
- Yield: Volta’s near-9% yield comes from a clearly stated dividend policy (paying quarterly an equivalent to 8% of NAV). Current cash generation is ca.2.5x the dividend payout, which provides a good cushion for the dividend sustainability. It also means that there should be a growing dividend as the NAV grows.
- Valuation: Volta trades at a double discount: its share price is at an 8% discount to NAV, and we believe its MTM NAV still includes a further sentiment-driven discount to the present value of expected cashflows. Volta targets an 8% of NAV dividend (8.9% 2025E yield, on current share price).
- Risks: Credit risk is a key sensitivity. In this note, we examine the valuation of assets, highlighting the multiple controls to ensure validity. The NAV is exposed to sentiment towards its own and underlying markets. Volta’s long dollar position is only partially hedged.
- Investment summary: Volt Finance’s NAV, and the discount to NAV, may be volatile over time. Fundamental long-term returns have been robust: 9.7% p.a. (dividend-reinvested basis) since inception. Volta’s performance relative to that of its peers, and the market it operates in, has been strong. Returns on investments made after the financial crisis have been double those pre crisis.
