Invesco is the largest shareholder in the investment platform with a 43.6% stake.
The asset manager has valued the company at £494m, according to JP Morgan Cazenove analysis of three of its investment trusts. However, this week the company set a price for IPO between £1.54 and £1.66 per ordinary share, implying a market capitalisation of between £626m and £675m.
The AJ Bell pricing would represent an uplift between 27% and 37% on the carrying value in three Invesco investment trusts that hold AJ Bell, JP Morgan Cazenove said in a report by Adam Kelly and Christopher Brown published on Tuesday.
That includes Barnett’s £882.37m Perpetual Income and Growth investment trust, which this month was the subject of concerns about its wide discount to net asset value. It currently sits at 12.1%, according to the Association of Investment Companies (AIC).
The £3.6bn Invesco Income open-ended fund he manages also holds AJ Bell with a 2.49% allocation while the investment trust held 1% for the half-year period ended 30 September 2018.
The £240.94m Keystone Investment Trust, managed by James Goldstone, holds the largest allocation of any Invesco trust to AJ Bell, 2.4%, and therefore would enjoy a rise in NAV of between 0.7% and 0.9%, according to JP Morgan Cazenove’s calculations. The boost would be marginally higher in the open-ended Invesco Income fund at approximately 0.73% to 0.93%, according to Portfolio Adviser calculations based on the JP Morgan Cazenove report.
The UK Smaller Companies investment trust, managed by Jonathan Brown and Robin West, would experience a boost to NAV of 0.3% to 0.4%, the same as Perpetual Income and Growth.
Timing is right for pre-IPO opportunities
Invesco will be subject to a 180-day lock-in period following the date of admission, alongside Seneca Investment Managers, another major shareholder.
Earlier this month, Seneca fund manager Richard Parfect pointed to their holding in AJ Bell as an example of why they participated in the Merian Chrysalis IPO, which raised £100m for the Private Equity sector investment trust.
Parfect said: “We know from our experience as private equity investors in AJ Bell for many years that supporting successful, highly motivated owner/managed businesses can prove very profitable.”
Investing in late private equity/pre-IPO opportunities is an appropriate strategy for this stage of the economic and market cycle, he said.