The dominance of more established vehicles within the same sector may be to blame, brokers have said, as on the same day rival NB Floating Rate Income announced it had raised a further £425m via a ‘C’ share issue.
Threadneedle had been hoping to bring the Asset Backed Income Trust to market later this year, and had designed a vehicle that would offer investors access to mezzanine ABS debt picked from the global universe. The trust had a target net yield of 6% and manager Henry Cooke, head of Threadneedle’s European ABS desk, hoped to deliver returns in the region of 7% to 10% a year.
Announcing its decision to postpone the launch, Threadneedle said there had been “insufficient” demand to support its proposals. “We continue to believe there is an opportunity for clients in the sector, and may revisit at a later date,” a spokesperson added.
Tough market for smaller IPOs
Despite the year getting off to a strong start in terms of IPOS, with Winterflood Securities data revealing that more than £1bn had been raised by the trust sector during the first three months of 2013, brokers lamented the dominance of larger funds within the closed-end sector, and Numis pointed out that private client buyers can sometimes be reluctant to commit to smaller launches.
“The major multi-asset investors such as BlackRock, Baillie Gifford, Schroders, Thames River or Architas appreciate the benefits of the closed-end structure in specialist asset classes. However, they are wary of illiquidity and increasingly want vehicles to be at least £200m,” Numis said.
“This is often a tall order at IPO stage, particularly for funds investing in asset classes that are unfamiliar to most investors,” said Numis. “The other key buyers of IPOs have been the private client stockbrokers. However, they are also wary of investing in smaller issues, and it is often hard to get frim commitments of interest in advance due to the number of decision makers involved,” the brokerage added.
At the other end of the scale, NB Global Floating Rate Income raised assets via its ‘C’ share that were significantly ahead of its £200m target. Including these assets, the trust’s market cap will stand at around £1.3bn, making it the tenth largest investment company listed on the London Stock Exchange.
