Closed ended  

Investment companies see record fundraise

Investment companies see record fundraise

There was a record-breaking start to the first half of 2019 for secondary fundraising at investment companies as they raised £4bn in new funds.

A mixture of London Stock Exchange-listed retail and institutional investors generated the highest figure over any six-month period on record, according to data from the Association of Investment Companies.

That total raised between January and June was a marked increase on the £2.2bn from the same period in 2018, and £3.4bn in 2017. 

It also eclipsed the second-highest amount raised in a six-month period - £3.6bn between February and July 2017.

Secondary fundraising is when an investment company raises new money by issuing shares, and is typically used to fund new growth within a business they have already invested in. 

Companies in the Renewable Energy Infrastructure sector raised £1.1bn of the £4bn. This was powered by £506m from Greencoat UK Wind, the most by any single firm.

The second and third highest contributing sectors were Property–UK Commercial (£587m) and Infrastructure (£291m).

The first half of the year also saw the launch of new investment companies led by Schiehallion (£361m) in the Growth Capital sector, and US Solar Fund (£153m) in Renewable Energy Infrastructure. 

Ian Sayers, chief executive of the AIC, said: "The record level of secondary fundraising, driven by income-generating assets such as renewable energy infrastructure and property, shows investor demand for income is still very high.

"Investment companies are particularly well suited to these types of illiquid assets.

"The closed-ended structure means investment company managers don’t have to worry about inflows and outflows, allowing them to focus purely on performance.

"And the fact that investment companies are listed on a stock exchange means investors have liquidity throughout the day."

James Colasanti is a freelance reporter at FTAdviser