India Capital Growth, the best performer in its sector over three and five years, is giving shareholders the chance to sell their shares on a narrow discount.
India Capital Growth (IGC) has announced that at its third two-yearly redemption point on 28 November shareholders will be able to sell all their shares at 3% below net asset value (NAV). This is less than half the current discount of 7%.
The £152m mid-cap fund, the top performer in its sector over three and five years, is not encouraging shareholders to exit. It says the redemption facility, which started in December 2021 when it needed support for a continuation vote and the shares were stuck on a double-digit discount, is part of an active policy to ensure the shares do not drift too far from NAV.
IGC, which is managed by Gaurav Narain at River Global, last stood at a premium, with the shares trading above NAV, in early last year, enabling it to issue 5.8m new shares.
Since then, macroeconomic pressures, fears of US tariffs and the strength of the pound against the rupee have weighed on the portfolio which has trailed at an average discount of over 9% in the past year with the company buying back 1.6m shares.
Over 12 months, the investment company’s net assets have fallen 4.8%. Longer-term performance remains strong, however, with the company citing a total underlying return on net assets of 64.9% over three years and 169.2% over five years.
The shares have done even better returning a total of 77.9% and 219% over three and five years, beating the 55.3% and 95.7% average returns of trusts in the small India sector. Its rivals are Abrdn New India (ANII), Ashoka India Equity (AIE) and JPMorgan Indian (JII).
According to Bloomberg data, IGC is a favourite with private investors with customers of Hargreaves Lansdown, Interactive Investor and AJ Bell holding nearly 40% of the shares.
Redemption request forms will be available on the company’s website in early November. The facility only applies to shares held since 29 August 2023.
QuotedData’s James Carthew comments: “The India Capital Growth exit opportunity is not straightforward. Shareholders could sell the shares in the market close to a 7% discount today or choose to sell shares that they hold at the end of August at the end of November at a 3% discount. Anything could have happened to markets in the meantime. A 3% discount to the NAV of the redemption pool created for the exit opportunity could be way higher or lower than the current share price. To my mind, there is not enough of an upside to justify waiting. The trust is doing a good job of keeping the discount tight in any case. If you want out, perhaps sell in the market instead.“
