The Schroder British Opportunities Trust has grown its net asset value by 10.6 per cent in the seven months since its IPO.
The trust was incorporated in September last year and listed on the London Stock Exchange in December.
It raised £75m at IPO, just a third of its £250m target, in what it said was a “very challenging market”.
Other British smaller companies trusts failed to launch at the time. Sanford Deland cancelled plans to float a UK Buffettology Smaller Companies trust after failing to attract the required level of funding just weeks after Tellworth British Recovery and Growth did not raise the £100m it needed for its IPO and scrapped the launch.
By June 30 the Schroder trust had deployed 93 per cent of its raised capital across public equities, private equities and futures.
The trust is managed by Rory Bateman and Tim Creed, who said in its first annual report, published on the stock exchange this morning (October 5), the pandemic had given rise to an investment opportunity as firms in the UK, already undervalued because of Brexit, were at a further discount.
They added: “Very accommodating monetary and fiscal policy has created an ideal environment for equities as the economic expansion progresses.
“The early 2020 phenomenon of private equity managers focusing purely on their existing portfolios transformed into a far more expansive approach to new deals, as healthy firepower and rapidly returning confidence revealed a number of compelling opportunities.
“We are delighted to have been able to participate in a number of these high quality deals and are excited to be in such a strong position looking forward.”
When it launched last year the firm said it was a “once in a generation opportunity” to invest equity capital into high quality, high growth UK companies between £50m and £2bn.
The firm’s top three investments are in payment company Rapyd (8.2 per cent of NAV), water dispenser firm Waterlogic (4.8 per cent), and home care provider Cera (4 per cent).
It aims to invest 50 per cent in public equity investments, with the other 50 per cent going into unquoted stocks. It also aims to provide a NAV return of over 10 per cent each year.
The trust is currently 31.1 per cent exposed to private companies, with the portfolio managers adding they intend to achieve the 50/50 split by September 2022.
The managers added: “We retain our optimism about the opportunities that lie ahead. The outlook for the UK economy is strong and in our view equity valuations remain very attractive relative to other global equity markets and asset classes.
“The UK small and mid cap market contains some of the best, most innovative growth companies in the world and we look forward to participating in their value creation.”
sally.hickey@ft.com
