Investment Trusts  

Japan trust fails to meet fundraising target

Japan trust fails to meet fundraising target

The Japanese investment trust launched by the team behind the British Empire Trust has failed to raise the amount of money it set out to.

The AVI Japan Opportunity Trust (AJOT) raised £80m from retail and institutional investors but had sought to raise at least £100m ahead of listing on the London Stock Exchange tomorrow (23 October).

The trust will be run by Asset Value Investors (AVI) and managed by Joe Bauernfreund, the fund manager of British Empire Trust. It will invest in undervalued cash-rich and over-capitalised small-cap Japanese equities.

Mr Bauernfreund said: "It has been an exciting journey and I am pleased that AVI will be able to continue its work in Japan with a dedicated fund. This will be a portfolio of some of the extraordinarily cheap smaller companies in Japan at a time when an improving corporate governance regime is forcing change.

"We will have the right to make shareholder resolutions at annual general meetings, which are becoming more common with a record number this year. AJOT is an opportunity we see for investing in Japan today as evidenced by the more than £1m invested by the AVI team in AJOT."

Mr Bauernfreund has said AVI will take an activist approach to its investments, encouraging management and boards of investee companies to improve corporate governance and reduce excess capital through distributions to shareholders.

The trust will charge 1 per cent a year of either the net asset value or the market cap, whichever is lower.

Norman Crighton, chairman of AJOT, said: "We are pleased to have successfully raised £80m, providing an exciting opportunity for UK retail and institutional shareholders to access distinctive investment opportunities in Japan's equity market.

"The board and I look forward to working with Joe and the highly experienced team at AVI. They have an established track record of engagement with investee companies in Asia and I am confident in the prospects for this strategy to deliver sustainable, long-term returns for shareholders."

AJOT is one of a spate of investment trusts which have launched recently, though some of them have failed to meet their fundraising targets at launch.

The Mobius Investment Trust, managed by veteran emerging markets investor Mark Mobius, has raised just half its £200m target at launch last month.

On the other hand Terry Smith's Smithson small cap investment trust broke Neil Woodford's record for the largest trust launch in the UK, raising £822m - more than three times its original target.

damian.fantato@ft.com