Smithson fund bags largest ever UK investment trust fundraising
By Oliver Haill
Date: Wednesday 17 Oct 2018
(Sharecast News) - Terry Smith's new Smithson small- and mid-cap fund has raised £822.5m from investors ahead of listing, making it the largest ever initial fundraising by a UK investment trust.
Managed by Smith's Fundsmith team, Smithson Investment Trust received applications for 82.25m shares of £10 apiece, of which £38.8m was via an institutional placing, £28.2m in an offer for subscription to retail investors and £15.2m via an intermediary offer.
The fundraising tops the £800m raised by Woodford Patient Capital in April 2015, the previous largest initial offer, and the £606m drummed by BioPharma Credit last year.
Shares in the trust will begin trading on Friday, 19 October.
Smith, the former Collins Stewart and Tullett Prebon boss who founded Fundsmith in 2010 and is CEO and chief investment officer, put £25m of his own money into the new trust. Fundsmith also pledged to "bear all of the costs associated with Smithson's launch, meaning that for every £10 invested in the issue shareholders will receive £10 of value on day one of trading".
Smithson will invest around the world in small and medium-sized companies, with this description encompassing those with a market capitalisation of between £500m and £15bn.
The trust's investment management team will be led by Simon Barnard as investment manager and Will Morgan as assistant investment manager, a pair hired from Goldman Sachs last year.
Smith, who will provide advice and support the duo in his capacity as CIO, hired the pair to research the opportunity presented by applying Fundsmith's investment process to smaller companies than those Fundsmith's main equity fund would invest in, hence the Smith-son name.
"Our thesis that many of the existing small and mid cap funds in the market are anachronistic by being overly home biased and that there was a gap for a quality small and mid cap global equity fund appears to have been borne out by a wide range of investors subscribing for the Smithson offer," Smith said.
Management fees for the trust will be "aligned" with investors' interests, Fundsmith said, as it will charge a 0.9% annual management fee, based on Smithson's market capitalisation, not the commonly used net asset value.
After the issue placed the trust top of the list of the biggest UK investment company launches, Ian Sayers, chief executive of the Association of Investment Companies said: "It's a testament to the strength of the investment company structure that Smithson Investment Trust has raised so much money, becoming the largest UK investment company at launch. Clearly, the closed-ended structure allows managers to pursue long-term focussed strategies without having to worry about redemptions."
Investec was the sole sponsor, bookrunner, broker and adviser to the intermediaries offer and will be the company's broker.
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