Interactive Investor

Liontrust ESG trust cancelled due to lack of demand

2nd July 2021 10:50

Tom Bailey from interactive investor

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Liontrust initially announced its intention to launch the trust in May, targeting £150 million in the initial public offering.

Liontrust has cancelled the proposed launch of its ESG investment trust, citing a lack of investor demand.

The asset manager noted that the trust received “significant support” from investors, with nearly 2,000 investors subscribing. However, overall demand fell short of the minimum £100 million set out in the prospectus.

Liontrust announced its intention to launch the trust in May, targeting £150 million in the initial public offering. The trust would have been known as Liontrust ESG and traded under the ticker ESGT.

The asset manager already runs several ESG and sustainability focused open-ended funds. In total, Liontrust’s sustainable investment team oversees around £10.2 billion worth of assets, up from £2.5 billion in 2017. However, the launch would have marked Liontrust’s first closed-ended investment trust since it exited the sector in 2004. 

The trust planned to be different from Liontrust’s current ESG open-ended strategies in two ways. First, its portfolio was intended to be much more concentrated, with somewhere between 25 and 35 companies. Second, it had planned to have more exposure to smaller-cap shares.

For this, the closed-ended nature of the investment trust structure was seen as ideal. As the asset manager noted during its initial announcement, the closed-ended structure, with its fixed pool of capital, would have allowed the managers to be less concerned about shorter-term volatility and liquidity.

Commenting on the trust’s cancellation, John Ions, chief executive of Liontrust, said:  “The strength of interest from individual investors shows the potential there was of building ESGT over the next few years. 

“Nearly 2,000 individual private investors demonstrated their confidence in the investment proposition, the long-term opportunities offered by ESGT and the track record of the Liontrust sustainable investment team. We are disappointed we won’t get the chance to repay their faith through an investment trust after everyone worked so hard to secure its launch.  

“We received significant commitment from investors for ESGT post launch but not enough for the IPO. This reflects the challenging market conditions for fundraising for investment trusts.”

In the fourth quarter of 2020, two proposed UK equity trusts were cancelled due to a lack of investor demand, the Buffettology Smaller Companies Investment Trust and the Tellworth British Recovery & Growth Trust.

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