Friends Ivory to transfer £180m Investors Capital exposure into FTSE tracker
British Assets Investment Trust is looking to switch its £180m exposure to the Investors Capital Trust into a FTSE tracking Oeic fund.
Both trusts are run by Friends Ivory & Sime (FIS) and some 32.7% of the £550m British Assets Trust is in Investors Capital.
British Assets has been looking to exit Investors Capital since 1994, according to Gordon Humphries, business development director at FIS, but has always wanted to get out at the right price.
Investors Capital, a split cap, currently has reconstruction proposals on the table for implementation at the end of September. Investors have the choice of continuation in the new vehicle, cash or a FIS-run FTSE Oeic.
Investors Capital capital shares are on a discount to NAV of 5.9% as of 7 June, according to TrustNet, while packaged units are on a discount of 4.7%.
Humphries said the Oeic route allowed British Assets to reduce its exposure to Investors Capital at an appropriate discount.
John Stubbs, manager of British Assets, said the terms under which the trust was exiting Investors Capital would represent an approximate £10m lift in assets, adding as much as 2% to NAV.
William Thomson, chairman of British Assets, said: 'In future, the investment performance of the company's portfolio will be determined solely by returns from direct equity holdings rather than being partly dependant on changes in the discount to NAV of the shares of ICT.'
British Assets has been one of the best performing shares in the Global Growth & Income sector. Over five years to 1 May, it is ranked second out of five with a return of 92.08%, compared with a 27.83% return and ranking of first out of five over three years.
As of 6 June 2001, the discount to NAV on British Assets stood at 7.7%.
In the shorter term, Friends Ivory & Sime said it is pleased with the performance on the portfolio. The trust produced its interim results up to 31 March 2001 at the end of May.
Up until the end of March the portfolio outperformed its benchmark over six months by 2%. Its NAV was -9% compared to the -11% total return for the composite benchmark index of 75% FTSE All-Share Index and 25% FTSE World (ex UK) Index.
Stubbs said: 'This return was achieved against a difficult background where world equity markets were weak, mainly as a result of the concern over the state of the US economy.
'During the period, retail initiatives have continued to create demand directly through the company's ZeroCharge Isa and investment plans. Despite the difficult market conditions, it was encouraging that demand for the company's Isa in the four months to 30 April was more than 12.5% higher than for the same period last year.'
Up to 31 March 2001, British Assets has continued its policy of buying in ordinary shares, growth shares and warrants with the effect of enhancing the fully diluted NAV.
During the period a further three million ordinary shares and 6.4 million growth shares were purchased for cancellation. The purchases made during the period are estimated to have added more than 0.5p per share to the fully diluted NAV of the company.
Predicted to hit £180bn AUM
Our regular video series continues
Speech to take 20 minutes
£60m AUM to Sanlam UK