Chris Giles is to increase the number of holdings in Exeter Enhanced Income's portfolio from 48 to 5...
Chris Giles is to increase the number of holdings in Exeter Enhanced Income's portfolio from 48 to 55.
Giles, the manager of the £75m offshore closed end fund aims to diversify the portfolio at the same time as raising a further £25.9m. This will come through a placing of new ordinary shares and the drawing down of a bank loan facility to diversify the portfolio.
He intends to take advantage of the relative cheapness of income shares from split capital investment trusts. Two income shares which Exeter favours are Martin Currie Income & Growth priced at 100p offering a yield of 7.54% and Gartmore SNT priced at 37p offering a yield of 8.53%.
The fund is to issue 20 million of new ordinary shares at 91.5p with the balance of the £25.9m consisting of monies from a RPI linked bank loan. Exeter estimates this will total about £7m.
The £25.9m sum was decided upon as it would enable the fund to maintain its capital structure of 55% ordinary shares and 45% bank debt. Since inception, its ordinary shares have traded continuously at a premium to NAV reflecting the high level of income they offer. As at 6 April this premium was 15.1% to NAV.
On 21 February 2000, an increased aggregate dividend of 9.75p for the year ending 31 October 2000 was announced. At the placing price of 91.5p this represents a dividend yield of 10.7%.
John Roper, chairman of Exeter Enhanced, said the fund's attractive yield and progressive dividend policy created demand for ordinary shares which was not being fully satisfied by supply in the secondary market.
He added: "There is continuing demand from investors for shares offering the prospect of a high and growing income against a backdrop of the current interest rate environment and the low level of income available from alternative investments.
"The reduction during the first quarter of this year in the market rating of the income shares and ordinary shares of split capital investment trusts provides an attractive buying opportunity."
The fund, domiciled in Guernsey, was launched in October 1998 with the objective of providing ordinary shareholders with a high level of income and the opportunity for income and capital growth.
Its investment portfolio comprises 80% equities and 20% fixed interest stocks.
The equity portfolio is invested in ordinary shares, income, preference shares and capital shares of split capital investment trusts and other closed-end funds. While the fixed interest portfolio is invested in sterling denominated corporate bonds and convertibles.
Two global vehicles
'Further plug advice gap'
Must appoint separate CEOs and boards
Advisers do come out well
Will report to Mark Till