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UK equities trust scraps IPO due to lack of demand

UK equities trust scraps IPO due to lack of demand

A new investment trust has cancelled plans to float after failing to attract the required level of funding.

The Tellworth British Recovery and Growth trust, which announced its intention to float at the beginning of September, said today (October 8) it had taken the decision not to proceed with an initial public offering at the current time.

It said: “While the investment proposition and investment team have been very well received by discretionary wealth managers and intermediary retail platforms, the overall level of demand was insufficient to meet the minimum fund size.”

A prospectus for the trust, published last month, said it was seeking to raise up to £100m through the initial placing, with the flexibility to raise up to £500m.

The trust’s investment objective was to generate long-term total returns over a rolling five year period by investing principally in UK listed companies with a significant presence in the UK.

Branded a new ‘best of British’ investment trust, the portfolio was to be managed by Tellworth Investments in a “relatively concentrated” manner to represent the fund house’s high conviction methods.

UK equities have not fared well over the past few years as Brexit concerns, the coronavirus crisis and the associated dividend drought alongside a ‘value’ bias have created strong headwinds for the market.

The proof is in the figures: investors pulled more than £1.5bn, according to Investment Association data, from funds in UK sectors from May to July.

By comparison, the Global sector saw three months of inflows as investors plunged their cash into global funds – heavily exposed to the US – to the tune of £2.5bn.

The UK has lagged other markets in terms of performance for some time and has struggled to come back in the aftermath of the coronavirus-induced market crashes.

The S&P 500, the Nikkei 225 and China’s SSE Composite Index are all up year-to-date, with the US blue chip index having climbed 53 per cent since March 23.

Closer to home, Germany’s Dax, although not recovering all of the losses in the market crash, is up nearly 50 per cent since the end of March.

But the UK has struggled to recoup its losses – the FTSE 100 is up only 19 per cent since global markets tumbled mid-March and is down 22 per cent since the start of the year.

imogen.tew@ft.com

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