Japan trust seeks more cash for 'opportunities'

Japan trust seeks more cash for 'opportunities'

The AVI Japan Opportunities Trust has confirmed it will issue more shares to raise capital for investment.

The £81.7m investment trust, which was launched in September by Asset Value Investors and is managed by Joe Bauernfreund, is aiming to invest in small Japanese companies which have large amounts of cash on their balance sheet and which are undervalued.

It aims to exploit the fact that Japanese corporate governance reforms, introduced as part of prime minister Shinzo Abe's economic policy, are encouraging companies to spend their cash and reward shareholders.

According to the company, the further share issuance will “satisfy demand for new shares and to provide additional funding for investment opportunities”.

In a statement, AVI said: “Since the company's launch, there have been a number of positive corporate governance developments in Japan and the investment manager's conviction that there is a significant amount of unlocked value in quality, over-capitalised Japanese companies has only strengthened and it continues to identify a pipeline of attractive opportunities in line with the company's investment strategy.”

The final number of ordinary shares being placed is yet to be confirmed, but the company has said that the book will close at 3pm on May 10, 2019.

According to data from the Association of Investment Companies, the AVI Japan Opportunities Trust is currently operating at a 2.3 per cent premium to NAV.

In October 2018, the investment trust failed to meet its fundraising target of £100m prior to its listing on the London Stock Exchange.

The trust charges 1 per cent a year of either the NAV or the market cap, whichever is lower.

Over the past six months the fund has returned 3.47 per cent while its sector, the AIC Japanese Smaller Companies, has returned 3.56 per cent.