Collins Stewart is looking to raise £60m for a split-cap trust employing a value and momentum based ...
Collins Stewart is looking to raise £60m for a split-cap trust employing a value and momentum based investment style, writes Adam Lewis.
The Blue Chip Value & Income fund, a Guernsey-based portfolio launched in April 2000, currently has gross assets of £18m and the group is keen to expand the shareholder base.
Its investment process is based on the Quest system, designed by Terry Smith, chief executive at Collins Stewart and former head of research at UBS Warburg. Smith departed Warburgs in 1992 after writing his book 'Accounting For Growth'.
Smith said: "Since its launch in Guernsey, the performance of the fund is up 27%, compared to a 5.3% fall in the FTSE All-Share and a rise of 15.2% in the FTSE 350 Value Index, all because of the application of the Quest system."
Quest provides online value added financial information, research and commentary to portfolio managers, assessing stocks, sectors and markets, and monitoring portfolios and screens for good stocks. It has a database of 1,200 UK and European companies, with up to a 15-year history and more than 220 data items per company.
It also aims to provide the fund manager with specific information to help decide the value of the company, its quality and momentum going forward.
Quest will aid the UK equity stock selection side of the new portfolio, which will have 75% of the portfolio in UK blue chips and 25% in income shares of high yielding investment trusts and bonds.
Target companies for the trust are those with a high yield, strong dividend cover, good earnings per share and dividend growth, a market cap above £500m and a low P/E.
Collins Stewart estimates the blue chip portfolio will yield around 5.5%, compared with 9.5% for the high yield element, giving an overall portfolio yield of 6.5%.
The company is looking to raise up to 25 million new ordinary shares at mid-market price plus 2p, 10 million zero dividend preference shares at 100p each and an additional banking facility for up to £20m, increasing the total gross assets of the fund to £76m.
Collins Stewart begins marketing the trust this week and dealings are due to commence on 1 June.
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