The previous record for existing trusts issuing new shares (secondary fundraising) was £5.5bn ($7.4bn, €6.2bn) in 2015. As a result, total assets under management (AUM) for the investment company sector hit a record of £174bn at the end of August.
The rise in AUM was also assisted by a strong year for new issues within the sector, with trusts’ raising £2.5bn from the 15 issues to date this year, up from the £1.3bn raised in seven issues in 2016.
In terms of secondary fundraising, it was those trusts investing in high yielding alternative assets which issued the highest number of new shares this year. Leading the way was the Sector Specialist: Infrastructure sector, which issued £1.35bn of new shares, followed by the Property Specialist sector (£0.97bn), Sector Specialist: Infrastructure – Renewable Energy (£0.79bn) and Sector Specialist: Debt (£0.7bn).
When it comes to new issues it was the property sector which dominated, accounting for 56% of all the assets raised (£1.4bn). The largest new issue of the year was the BioPharma Credit trust, which sits in the Sector Specialist: Debt sector and raised £605.8m in March.
Unique advantage
“The investment company sector has delivered strong, positive returns over one, three, five and 10 years, the number of IPOs has increased on last year and secondary fundraising has reached a record level,” said Ian Sayers, chief executive of the AIC.
“This has been driven by the sector’s unique advantages in delivering a higher and growing income and most of this was from investment companies investing in alternative assets such as infrastructure and property, which are much better suited to the closed-ended structure of an investment company.
“This year also saw adviser and wealth manager purchases of investment companies reach record levels, with every chance that they might exceed £1bn in 2018. It’s not surprising that with the demand for the sector being so strong, discounts have narrowed and continue to trade close to an all-time low.”
