Report shows improving conditions for fundraising during 2012

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THE past year has seen an improvement in conditions for fundraising despite ongoing challenges, according to the Association of Investment Companies (AIC).

It has welcomed data from Winterflood Securities which shows £3.2bn has been raised in the last 12 months, compared to £2.5bn the previous year, taking both new and secondary issues into account.

Launch activity has also increased and seven new investment companies have launched, compared to six in 2011. The largest was Starwood European Real Estate Finance, launched in December raising £228m, followed by the Battle Against Cancer Investment Trust which raised £207m on its launch in October.

Over the last year, £847m has been raised through new issues compared to the £691m raised in the previous year.

The AIC said that income has dominated much of the secondary market issuance activity, with around a quarter of shares coming from the infrastructure sector. HICL Infrastructure raised a total of £318.4m, of which £250m was through a C share issue.

Data from Winterflood Securities looking at regular secondary issuance also suggests that companies able to issue new shares tended to have an income focus with the exception of Personal Assets Trust in the global growth sector, which raised £121.2m.

Annabel Brodie-Smith, communications director for the AIC, said: “Clearly investment companies with an income focus continue to be in vogue, and this is reflected in both valuations and issuance activity. So it is not surprising to see that once again, with interest rates remaining at record lows, much of the activity in the investment company sector this year is related to income.

“It will be interesting to see how this informs activity next year.”

The AIC said companies were increasingly getting permission from shareholders to use the new investment trust tax rules which came into effect in April, allowing companies to pay dividends from capital.

However, although 26 companies had sought approval for the move, few were then going on to use that option in practice.