Scottish Value's Ofex, launching in September, will operate as a quasi open-ended fund, expanding or...
Scottish Value's Ofex, launching in September, will operate as a quasi open-ended fund, expanding or contracting in line with demand for its shares.
The group is hoping to raise £10m through an institutional placing, but Colin McLean said the SVM Ofex fund will be run as a quasi-open ended investment company. In practical terms this means Scottish Value will issue shares when there is demand for them and buy them in when there is a overhang in the market.
This should ensure the fund's shares trade close to NAV, according to McLean. Shares in the fund will also be available to investors in the secondary market.
The fund will be run by David Stevenson and invest in around 20 to 30 stocks. Up to 20% of the portfolio will be able to continue its exposure to post-Ofex companies for between six to 12 months after they exit the market. Stevenson said: "We have followed a number of Ofex stocks for some time. Po Na Na, a bar and club operator, has been in SVM UK Growth fund since it came to Ofex in February 1996 at 10p. It is now 180p, having announced it will shortly move on to AIM. We estimate that despite its good growth record and strong growth prospects, it still stands on a rating materially below the market averages."
Stevenson said the portfolio is likely to have a bias towards technology stocks. Recently Turbo Genset, manufacturer of power generation motors, and Transense, developer of non-contact sensors, have moved up to a full listing on Techmark and AIM respectively. The final round of financing for Turbo Genset was at £13 and it is currently priced above the £20 level.
Although football clubs, such as Manchester City, Rangers and Arsenal are listed on Ofex the fund is unlikely to be exposed to them, according to Stevenson. He said: "Football clubs as investments are risky, for a good flow of income you usually have to rely on the players on the pitch, which in some cases is not advisable."
The benchmark for the fund will the FTSE Fledgling index as Ofex is not an actual index but a market. McLean said he was encouraged to launch the fund by JP Jenkins, who established the Ofex market. He said: "JP Jenkins has indicated it will give permission for their Ofex brand name to be used on the fund. However, it will have no involvement in managing, sponsoring or market-making the issue."
Achievements, charity work and other happy snippets
Laughable excuses for persisting
Spent 56 years at Schroders
Warns on profits