Strong year for fund raising, but a year of two halves
Despite a volatile year for equities, it’s been an active year for the investment company sector, with a string of new issues and fund raising activity, says the Association of Investment Companies (AIC).Whilst new issues were well ahead of last year by funds raised, if not in number, in many respects it has been a year of two halves, with 69% of new issues by value coming in the first half of the year. For the first time ever, all new issues were domiciled overseas, primarily in Jersey or Guernsey, with 23% of new issues by value coming from the Hedge Funds sector.
Some 19 new issues collectively raised some £4.5bn, compared to £2.7bn raised last year by 25 investment companies. The largest new issue was European Capital, a Private Equity investment company which listed on Chapter 14, raising £714m, followed by 3i Infrastructure, which raised £700m.
The number of investment companies issuing new shares has also been strong, with over £2bn collectively being raised by some 33 investment companies. The largest proportion came from the Hedge Fund sector, but new issuance activity was also seen amongst the UK sectors, Private Equity and elsewhere.
The Environmental sector saw continued new issuance, with both Impax Environmental Markets and Jupiter Green Investment Trust raising new money through C share issues, raising £105m and £24m respectively. Some of the less specialist investment companies raising new money included Midas Income & Growth, a Global Growth & Income investment trust, raising £22m through a C share issue and Gartmore Growth Opportunities, a UK Smaller Companies investment trust, which raised £30m through a C share issue.
Investment policy and changes to company objectives have also continued apace. Last year was a record-breaking year for the investment company sector, with some 19 investment companies announcing policy and objective changes. So far in 2007, some 16 investment companies have announced policy and objective changes, with one more expected to be announced in December. Policy and objective changes varied widely, but generally involved investment companies looking for more investment flexibility, for example to invest in AIM stocks and other companies on the official list or to invest in emerging markets. The changes show the appetite amongst Boards to ensure that investment companies continue to maximise opportunities for investors.
Daniel Godfrey, Director General, Association of Investment Companies (AIC) said: “It’s been another eventful year for the investment companies sector, with a high level of new money coming into the sector, many investment policy and company objective changes as well as a busy public affairs agenda with the VAT case win and the listing rules review.
“It has been a turbulent year for equitiesand discounts have widened from 4.7% a year ago to an average of 9.7% at 30 November 2007. Investors need to take a long-term view, although cautious investors should bear in mind that regular investing can not only help smooth out share price highs and lows, but also discounts. The industry remains in a strong position to deal with any challenges which may lie ahead.”