Polar Capital Global Financials mulls re-expansion – The board of Polar Capital Global Financials Trust says that it has noted the significant increase in interest in the financial sector and other out-of-favour sectors in November 2020, which resulted in a sharp jump in the share prices of financial stocks globally. It notes that, as a result there has been a greater interest in the trust’s shares, which have traded at or around a small premium to its NAV since 27 November 2020.
The company currently holds 79.3m shares in treasury. Earlier this year, it held a tender offer in fulfilment of a promise to offer shareholders an exit seven years after its IPO. This took place at the depths of the COVID-19 panic and, despite the obvious low valuation of the trust’s portfolio, quite a few investors ticked the ‘cash’ box.
About 500,000 shares have been re-issued recently out of treasury and under present authorities the company has the authority to issue another 11.8m shares (about 9.6% of issued share capital, excluding treasury shares) on a non pre-emptive basis.
The board believes that certain investors would welcome an opportunity to make a large investment in the company. It will therefore ask shareholders for authority to re-issue the remainder of the treasury shares by way of one or more non pre-emptive placings or by continued recurring issuances in response to market demand from time to time. The price or pricing formula for any issuance would be at a premium to prevailing NAV sufficient to cover expected costs of issuance, such that NAV per share would not be diluted.
Expect to see a circular published shortly to seek shareholder approval for this non pre-emptive re-issuance of treasury shares. The largest shareholders of the company have been consulted and have indicated that they would be supportive of such proposals.
[This is a slightly daft situation, those shareholders that cashed in their investment must be kicking themselves. Based on our conversations with the managers, the financials sector has a long and substantial recovery ahead of it and they are convinced that the trust can ride this and outperform. We wish it every success. Readers might want to refer to our last note for the background to this story.]
PCFT : Polar Capital Global Financials mulls re-expansion