Two new investment trusts announce intentions to float

When fully invested, both trusts intend to target dividend yields of 5% plus. 

The proposed IPOs of two new investment trusts have been announced this morning, both of which are aiming to deliver dividend yields of 5% or higher.

Responsible Housing REIT is aiming to raise £250 million to invest in supported housing accommodation, while Blackfinch Renewable European Income Trust is seeking £300 million to invest in European renewable energy infrastructure companies.

When fully invested, Responsible Housing REIT will target a dividend yield of 5%, while Blackfinch Renewable European Income Trust is aiming for a dividend yield of 1% to 3% in its first financial year, rising to between 5% and 5.5% the following year. From then on, a dividend yield of 6% will be targeted.  

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Responsible Housing REIT will be managed by BMO Real Estate Partners. It says it will “acquire and create quality, fit-for-purpose accommodation assets to cater for supported residents across a number of care sectors including adults and young people with learning disabilities, mental health issues, physical disabilities, addiction, those with support needs, those in need of temporary accommodation, the elderly and otherwise vulnerable individuals”.

Meanwhile, Blackfinch Renewable European Income Trust says it has identified a pipeline in excess of £500 million of renewable energy infrastructure assets (operational and construction-ready), which includes wind, solar, hydro, hydrogen and other assets.

Both Responsible Housing REIT and Blackfinch Renewable European Income Trust will, as part of their investment objectives, implement environmental, social and governance (ESG) factors. Blackfinch Renewable European Income Trust says it expects to qualify for the London Stock Exchange’s Green Economy Mark, which recognises that 50% or more of total annual revenues are derived from services that contribute to the global green economy.

The two proposed launches come against a buoyant backdrop for investment trust fundraising. In the first half of 2021, a record amount of £6.3 billion was invested into existing companies and IPOs.

The most recent successful IPOs were Seraphim Space Investment Trust (LSE:SSIT) and HydrogenOne Capital Growth (LSE:HGEN). Seraphim Space, which is the world’s first venture capital fund focused on new space technologies, had to scale back applications after surpassing its £150 million target amount. HydrogenOne Capital Growth raised just over £100 million before its listing, but this fell short of its £250 million target.

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A recently proposed IPO that failed to get off the ground was Liontrust ESG. The trust, which planned to invest in a sustainable manner, cited a lack of investor demand.

The fund firm 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.