Ashoka WhiteOak Emerging Markets Trust, a new UK investment trust seeking to achieve long-term capital appreciation through investment primarily in quoted securities that provide exposure to global emerging markets, announces its intention to launch an initial public offering targeting gross proceeds of £100 million through the issue of 100 million ordinary shares at an issue price of 100 pence per ordinary share. The company expects the prospectus to be published on 18 April 2023 on the company’s website at www.awemtrust.com.
White Oak Capital Partners, an investment manager founded by Prashant Khemka with leading emerging markets investment experience, will act as the company’s investment adviser.
Highlights
- Exposure to a compelling investment opportunity through proprietary bottom-up analysis: seeking to achieve long-term capital appreciation, primarily through investment in securities that provide exposure to global emerging markets. The company will access the investment adviser’s investment approach that targets well-managed, scalable businesses with superior returns on incremental capital at attractive valuations, as determined through its OpcoFincoTM valuation framework. Additionally, the investment adviser deploys a proprietary bottom-up framework called ABLExTM (Assessment of Business Longevity and Excellence) for ESG risk assessment and scoring. The framework consists of sector specific ESG risks and opportunities against which a company’s practices are assessed and rated.
- Access to seasoned, highly experienced team: The investment adviser has a very well-resourced team of seasoned investment analysts with extensive experience across emerging and developed markets. It is led by CIO and founder, Prashant Khemka, who was previously CIO and lead PM of the Goldman Sachs Global Emerging Markets Equity strategy before founding White Oak in 2017. Team members of the investment adviser intend to participate in the IPO for an aggregate subscription amount of £5 million.
- Alignment of interests with innovative fee structure: No fixed management fee, with the investment adviser entitled solely to an alpha fee paid in the company shares and based on outperformance vs the MSCI Emerging Markets Net Total Return Index (GBP) over discrete three year periods. The company will also have an effective discount control mechanism, allowing shareholders an annual opportunity to redeem part or all of their shareholding at NAV.
- Diverse and experienced independent board: comprising three non-executive directors, with broad and deep experience across emerging markets, fund management, and investment companies, chaired by Martin Shenfield (managing director of strategy at TS Lombard, with over 35 years’ experience in the asset management industry). The directors intend to participate in the IPO for an aggregate subscription amount of £70,000.
Compelling entry point for Emerging Market equities
- Emerging Market valuations are presently at multi-year lows relative to developed markets, with generally lower inflation, lower debt levels, and higher growth rates. In addition, the investment adviser believes emerging markets are benefiting from several secular tailwinds versus developed markets, including increased infrastructure spending and rapid digitalisation.
- Emerging market economies offer strong domestically-driven growth as well as a growing share of world exports backed by economies of scale and a large, relatively young talent pool. Furthermore, per capita income has more than doubled over the last two decades, increasing domestic demand for discretionary goods, travel and leisure, financial and healthcare services.
- Emerging markets are generally less well-researched and hence more inefficient compared to their developed market peers: emerging markets comprise over 40 per cent. of global GDP yet their universe represents only 11 per cent. of global equity indices, providing a rich source of potential alpha for active managers.
Commenting on the intention to float, Prashant Khemka, founder of the investment adviser, commented:
“We are excited by the prospect of listing AWEM on the London Stock Exchange. This easily accessible vehicle will provide investors exposure to emerging markets and the opportunity to generate significant alpha through exposure to a portfolio of great companies at relatively attractive valuations. Our well-resourced investment team has the credentials and expertise that place us in a unique position to achieve strong capital growth for shareholders. We look forward to building a new listed entity in London.”
Martin Shenfield, non-executive chairman of Ashoka WhiteOak Emerging Markets Trust plc, said:
“We are delighted to announce the proposed IPO of AWEM. The company is seeking to raise £100 million to invest in a portfolio of equities, with the aim of providing long-term capital growth for our shareholders through exposure to emerging markets
“AWEM has secured access to a world class investment adviser with significant experience in managing a leading equity investment trust. Together with the investment adviser, the board believes that emerging markets present a compelling investment opportunity. With emerging markets valuations at multi-year lows relative to developed markets, they offer an attractive entry point, while simultaneously exhibiting generally lower inflation, lower debt levels and higher growth potential.
“The company has a very attractive and innovative fee structure, with no annual management fee and an alpha fee paid entirely in the company’s shares, driven by outperformance against its benchmark over the medium-term, aligning closely the interests of investment adviser with those of the shareholders. A robust discount control mechanism, providing shareholders with the opportunity to redeem their shareholding at NAV on annual basis, should also contribute to protecting shareholder value.”