The board of Gervais Williams’ Diverse Income Trust is considering issuing £50m in shares to help bring down the price of the shares.
The trust’s shares trade at roughly a 5.1 per cent premium to the value of its net assets meaning new investors are paying above the odds for the trust’s assets.
Shares of trusts in the AIC UK Growth and Income sector trade at an average 1.5 per cent discount to the value of their net assets, meaning investors are purchasing the assets at a reduced price.
The trust is roughly £272m in size now and sits alongside Miton’s £400m UK Multi Cap Income fund. This makes the combined assets £672m and will surpass £700m if the C Share issue is successful.
In November last year, Miton said it had planned to limit the size of the multi cap income strategy - which encompasses the trust and open-ended fund - at between £550m and £600m.
“Taking into account the company’s performance since its initial public offering, the current rating of its shares, and the manager’s outlook for potential investee companies and the company’s underlying portfolio, the board is considering increasing the company’s capital base through a pre-emptive offer of C Shares to raise up to approximately £50m of gross proceeds in June 2014,” a statement from the trust’s board said.
“Any such fundraising would be expected to reduce the company’s ongoing cost ratio as well as broaden the company’s investor base to improve market liquidity for existing shareholders.”
