Edison reviews Tetragon Financial Group (TFG/TFGS)

London, UK, 13 November 2020

Edison reviews Tetragon Financial Group (TFG/TFGS)

Tetragon Financial Group (Tetragon) reported a 1.0% decrease in NAV in 9M20 in total return terms. NAV has so far proved resilient to market volatility, while Tetragon's shares followed the market sell-off in Q120 and lagged the following market recovery. This resulted in a historically high discount of 61%. Tetragon maintained its quarterly DPS of US$0.10 after reducing it in Q120 (implying a 4.3% annualised yield). In the current economic environment, Tetragon intends to increase its exposure to CLOs, as well as continue ramping up its private equity investments through Hawke's Point and Banyan Square Partners. Tetragon also launched a litigation finance venture (Contingency Capital).

Tetragon's share price did not fully recover with the broad market rebound which, coupled with resilient NAV, currently translates into a discount to end-September NAV of 61%. This represents a recovery from an all-time high of 72% recorded in March 2020, yet is still much wider than the 10-year average of 42%. Tetragon distributes its income to shareholders through dividends, as well as frequent share repurchases, and recently announced a new tender up to US$25m.

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