Best month in two years for investment trust issuance

by Hannah Smith from interactive investor |

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We name trusts that raised the most money in October, the strongest month in two years for share issuance.

October was the strongest month in two years for investment trust share issuance, according to Winterflood, with £1.7 billion raised across the sector. This is more than a 400% rise from the £343 million raised in September, and is 22% higher than the same month last year. Over the first 10 months of the year, investment trusts raised £5.8 billion, although this was 22% lower than the same period in 2019. 

October saw the second and third IPOs of the year: Home REIT (LSE:HOME) raised £241 million at IPO for investment in accommodation for homeless people across the UK, while Triple Point Energy Efficiency Infrastructure raised £100 million for its portfolio of energy efficient assets. In contrast, Tellworth British Recovery & Growth trust and Sanford DeLand Buffettology Smaller Companies decided not to go ahead with their IPOs due to a lack of demand. 

The largest fundraising in October was for Greencoat UK Wind (LSE:UKW), which raised £400 million through an oversubscribed placing at an 11% premium to net asset value (NAV). 

Infrastructure and property in demand

Winterflood said that demand for infrastructure remains strong with Aquila European Renewables Income Fund (LSE:AERI) raising €128 million (£115 million) at a 5% premium to its NAV, while SDCL Energy Efficiency Income’s (LSE:SEIT) placing was significantly oversubscribed and increased to £105 million. 

Specialist property funds are also in demand, with Supermarket Income REIT’s (LSE:SUPR) latest placing oversubscribed with £200 million raised, while Urban Logistics REIT (LSE:SHED) and Triple Point Social Housing REIT (LSE:SOHO) raised £92 million and £55 million, respectively.

Also in October, Merian Chrysalis (LSE:MERI) raised £95 million and Augmentum Fintech (LSE:AUGM) raised £28 million through an oversubscribed fundraising.

“The sector continues to see healthy levels of regular share issuance at premium ratings to NAV. An estimated £331 million was raised through smaller, secondary issuance in October compared with £132 million in September,” Winterflood said. This included Smithson (LSE:SSON), Worldwide Healthcare (LSE:WWH), Personal Assets (LSE:PNL), Edinburgh Worldwide (LSE:EWI), Baillie Gifford China Growth (LSE:BGCG), Pacific Horizon (LSE:PHI), Impax Environmental Markets (LSE:IEM), Baillie Gifford Shin Nippon (LSE:BGS) and Allianz Technology Trust (LSE:ATT).

Active year ahead

The firm notes that there are a number of trusts planning IPOs, share issues and placing programmes in 2021. Investment trusts proposing new or secondary issue activity include the Round Hill Music Royalty fund, Impax Environmental Markets (LSE:IEM), Schroder British Opportunities, and JPMorgan Global Core Real Assets (LSE:JARA).  

These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.

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