Further to the announcement on 22 April 2021 (click here to read our coverage and take on this) that the board of Polar Capital Global Financials (PCFT) was considering an issue of equity, proposals for a placing, the board has this morning announced an open offer, offer for subscription and intermediaries offer for a target issue of 100m C Shares (together the “initial issue”) and the implementation of a new placing programme of ordinary shares and/or C shares (the “placing programme”). C shares issued as part of the initial issue (the “issue shares”) will be priced at 100p per share and the open offer will be on the basis of one C share for every one ordinary share held.
‘Financials to continue to see a significant recovery in sentiment and stock prices over the course of 2021 and into 2022’
Reasons for and highlights of the initial issue and placing programme
- PCFT notes the continuing material recovery in sentiment towards the financials sector since November 2020. This has led to an increase in demand for its shares, which have consistently traded at or around a small premium to the NAV per share since 27 November 2020, enabling near daily issuances of ordinary shares from treasury. PCFT’s manager, Polar Capital LLP, believes that the sector will continue to see a significant recovery in sentiment and stock prices over the course of 2021 and into 2022 as COVID-19 vaccination programmes progress and economies open up following the lifting of restrictions by governments. PCFT’s board and manager understand that there is demand from certain investors for further investment in the company and have therefore been considering proposals for continuing the growth of the company through further share issuance.
- The issue of C shares allows for accumulated income and revenue reserves attaching to the existing portfolio to be regarded separately in respect of the next dividend payable to existing ordinary shareholders. The proceeds of the issuance of C shares under the initial issue will be segregated from the existing portfolio until conversion, which would follow the record date of the next dividend, on or around 5 August 2021. The C shares will convert into ordinary shares based on their respective NAV at the relevant time.
- The initial issue includes an open offer of up to 172m C Shares which will provide a significant pre-emptive element for existing ordinary shareholders.
- The subsequent placing programme provides flexibility for the potential further issuance of new ordinary shares or C shares after the initial issue.
- The initial issue and continuing placing programme will allow PCFT to grow, thereby spreading the company’s fixed running costs across a larger equity capital base and, following conversion of the C shares into ordinary shares, a greater number of ordinary shares in issue should improve their liquidity in the secondary market.
Robert Kyprianou, PCFT’s chairman, commented: “After nearly 15 years in the wilderness and very much out of favour, conditions are coming together where structural and cyclical factors should combine to re-rate global financials on both an absolute and relative basis. Indeed, the Board and I believe that an allocation to this large, diverse sector should be a core investment consideration in a portfolio, especially when you take into account that they are the main beneficiary of a strong economic recovery and potentially higher Government bond yields.”
PCFT: Polar Capital Global Financials sets out growth plans with financials revival set to carry on