New Star is offering investors access to its unquoted stock via its financials fund, which will ho...
New Star is offering investors access to its unquoted stock via its financials fund, which will hold a permanent weighting in the company.
On 21 August, manager of the New Star Financials fund Guy de Blonay invested 10% of his portfolio in the company's own shares, valued at £80 each. At the time, the New Star holding equated to a tenth of the portfolio but subsequent market movements and fund inflows have diluted this to 8.3% in the £4.5m fund.
As New Star is a private company lacking liquidity, the amount of shares within the portfolio will remain somewhat static, but the proportion this represents will fluctuate according to fund inflows and performance.
The unlisted shares can be valued upward or downward by an independent firm that holds a contract with New Star.
Managing director of New Star Mark Skinner said New Star shares had become available for purchase following a fund raising exercise to raise £10m for the purchase of Exeter.
Howard Covington, chief executive at New Star, stressed the group has no control over how New Star stock is priced. He also denied looking at floating part of the company on the UK stock market early next year.
The Financials fund was launched into New Star's World Invest Oeic umbrella in December 2001 but the group did not begin promoting the vehicle to retail investors until June of this year.
New Star's unlisted shares have previously helped provide a surge in fund performance. Shares were bought at the fund's launch in 2001, also at £80 each. At the time, they accounted for around 10% of the portfolio and were revalued to £150 days after being bought.
The initial spike in the fund's performance as a result of the holding was 9.5%. When the shares were revalued back to £80 however, the losses to the fund were not as severe, having just a 2.3% downward impact on the portfolio due to the increased size of the fund.
Over one year to 18 August it has returned to 6.5% against a specialist average of 6.3%, ranking it 13 out of 31 in the peer group.
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