InvestmentsMay 24 2013

Analysts back share issue for Schroder Oriental trust

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ByEleanor Lawrie

Analysts have backed the Schroder Oriental Income trust’s plans to raise up to £150m through a C-share issue, amid high demand for Asian equities.

The trust, which is trading at a 2 per cent premium to the value of its assets, is looking to raise £100m but the board has said it would extend this to roughly £150m, depending on demand.

Matthew Dobbs, who runs the £421.6m trust, has been managing Asian equity portfolios for Schroders for more than 25 years.

In the past five years, the trust has delivered a total return of 117.4 per cent, compared with the benchmark MSCI AC Pacific ex Japan index return of 47.6 per cent, according to FE Analytics.

Robin Stoakley, managing director of Schroders’ UK intermediary business, said the team had received “tremendously strong” interest from clients.

Simon Elliott, head of research at Winterflood Securities, agreed the timing of the issuance was fortuitous. “Oriental Income is a great success story,” he said.

“It gives exposure to the growth of Asian equities and you are being paid for it with a 3.3 per cent yield – an attractive combination. Matthew Dobbs has done very well for shareholders.”

Tom Tuite Dalton, analyst at Oriel Securities, said the share issuance was likely to be a success but that the £557.3m Schroder Asia Pacific trust, trading at a 10 per cent discount, could represent a better opportunity.