Investment trust fundraising hits record high for a calendar year. Tom Bailey reports.
Investment trusts are set to raise a record amount of the money in 2021, according to data released by the Association of Investment Companies (AIC).
The figures show that so far in 2021, existing investment trusts have been able to raise £8.71 billion. This already exceeds the previous record for secondary funding, which saw trusts raise £7.35 billion in 2019.
Renewable Energy Infrastructure saw the most raised on a sector level, with secondary funding totalling £1.69 billion. Infrastructure came second, raising just shy of £1 billion, at £998 million. This was followed by Growth Capital, at £803 million and Property-Europe, with £556 million.
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Schiehallion Fund (LSE:MNTN) raised the most amount of money in secondary funding, totalling £503 million. The trust focuses on fast-growing companies that are yet to be publicly listed. Chrysalis Investments (LSE:CHRY), another trust that invests in unlisted companies, raised £300 million in secondary funding, putting it in the top 10, as the table below shows.
In second place for secondary funding was Digital 9 Infrastructure (LSE:DGI9), bringing in £450 million. Digital 9 Infrastructure had raised £300 million when it first listed in 2021. The trust aims to invest in companies involved in the infrastructure behind the internet.
Investment companies raising the highest amounts through secondary fundraising
|Investment company||AIC sector||Amount raised through secondary fundraising (£m)|
|Schiehallion (LSE:MNTN)||Growth Capital||503|
|Digital 9 Infrastructure (LSE:DGI9)||Infrastructure||450|
|Renewables Infrastructure Group (LSE:TRIG)||Renewable Energy Infrastructure||440|
|Smithson (LSE:SSON)||Global Smaller Companies||424|
|Tritax EuroBox (LSE:BOXE)||Property – Europe||412|
|SDCL Energy Efficiency Income (LSE:SEIT)||Renewable Energy Infrastructure||410|
|Home REIT (LSE:HOME)||Property – UK Residential||350|
|Chrysalis Investments (LSE:CHRY)||Growth Capital||300|
|Tritax Big Box (LSE:BBOX)||Property – UK Logistics||300|
|Hipgnosis Songs (LSE:SONG)||Royalties||241|
Source: AIC/Morningstar (as of 4 October 2021). Excludes VCTs.
There have been eight other trust IPOs so far this year. The nine IPOs raised a collective £2.1 billion, which exceeds the amount raised by IPOs in both 2019 and 2020.
Richard Stone, chief executive of the AIC, said: “Healthy fundraising by investment companies this year is a sign that they have bounced back from the pandemic and are continuing to meet investors’ needs.
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“It’s particularly encouraging to see such significant fundraising for long-term assets in areas such as renewable energy infrastructure and ambitious growth companies. Directing capital into these areas is critical to rebuilding the economy as the recovery from the pandemic gathers pace. There is clearly strong investor demand and the closed-ended structure of investment companies continues to provide investors with a proven means of gaining exposure to less liquid assets.”
Investor demand for open-ended funds has also been high this year. Data from the Investment Association (IA) shows that fund flows are on track to beat the record set in 2017. In the first seven months of the year, £28.9 billion has been invested in funds. In 2017, a total of £48.6 billion was invested.
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