The Board of International Biotechnology Trust has announced two proposals which it believes will be of benefit to shareholders and potential investors. These include the introduction of dividend payments and amendments to International Biotechnology Trust’s investment policy to allow it to invest in unquoted funds. Both proposals will be subject to shareholder approval at a general meeting to be held on 29 September 2016.
The Board announces the introduction of an annual dividend, equivalent to 4 per cent. of International Biotechnology Trust’s Net Asset Value as at the last day of the preceding financial year (31 August), to be payable through two equal distributions in January and August of each year which it is expected will be paid out of capital reserves. Shareholder approval for the introduction of dividend payments will be sought at the General Meeting and at each annual general meeting of the Company beginning with the annual general meeting to be held in 2017. Subject to shareholder approval, the first dividend is expected to be declared in December 2016 and paid in January 2017. The dividend payments should help to further align shareholder interests with portfolio performance.
Although some of the large cap biotech companies in which International Biotechnology Trust invests have begun to pay dividends, the sector remains predominantly an area of capital growth, having delivered an annualised return of 12 per cent. (USD) over the past 20 years.
Changes to Investment Policy
International Biotechnology Trust offers investors exposure to the unquoted section of the biotechnology industry and has a number of direct investments in unquoted companies within the sector. The Board is proposing that International Biotechnology Trust will now also be able to invest in unquoted funds which themselves invest in unquoted biotechnology companies which the Board believes will:
- help diversify the Company’s investment opportunities to gain a broader exposure to a range of investments offering capital appreciation and producing income;
- give the investment manager, SV Life Sciences Managers LLP, more choice and access to unquoted companies, particularly where competition for access to unquoted companies is high; and
- likely increase the liquidity of the Company’s portfolio of investments due to the existence of a broader market for secondary sales of unquoted fund interests as compared to direct holdings in unquoted companies.
The Company’s current guideline range for its unquoted portfolio of 10 to 15 per cent. of total investments will apply to investment into unquoted companies and unquoted funds. Under the proposal, International Biotechnology Trust will be able to invest into unquoted funds managed by SV Life Sciences Managers LLP or third party managers. An opportunity has arisen to make a commitment to invest in SV Life Sciences Fund VI, which will invest using SV Life Sciences Managers LLP’s diversified approach covering Biotechnology, Medical Devices and Healthcare Services & IT. Subject to shareholder approval of the amendments to the investment policy, the Board has agreed to make a commitment of USD30 million into SV Life Sciences Fund VI, which should enable the Company to achieve the benefits of diversification, access to a wider range of unquoted companies and increased liquidity as outlined above. There will be no double charging of investment management fees in relation to this commitment.
In addition to this proposed change to the investment policy, the Company has also taken this opportunity to make some further housekeeping changes to the investment policy. The changes to the investment policy have been approved by the Financial Conduct Authority and will be put forward for shareholder approval at the General Meeting.
IBT : International Biotech to pay dividend