Edison issues review on The Law Debenture Corp
London, UK, 26 February 2021
Edison issues review on The Law Debenture Corporation (LWDB)
The Law Debenture Corporation (LWDB) made the most of its structure in 2020, with the revenue contribution from its independent professional services (IPS) business - which saw another year of strong growth - helping to overcome a shortfall in portfolio income after widespread UK dividend cuts, and driving an unanticipated 5.8% increase in the total FY20 payout. NAV total returns for the year ended 31 December were modestly positive, compared with double-digit declines for many UK Equity Income peers. The diversity of the underlying IPS businesses means CEO Denis Jackson is sanguine about prospects even in uncertain market conditions, while fund managers James Henderson and Laura Foll will continue to capitalise on the investment freedom the IPS income contribution provides.
Having historically traded at a c 5-15% discount, LWDB re-rated substantially in FY20, perhaps as investors began to recognise the value of the differentiated proposition. At 25 February 2021, the shares traded at a 2.8% premium to adjusted cum-income NAV (with both debt and IPS at fair value) and had a yield of 3.8%.
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