TwentyFour Income Fund (TFIF) has become the second debt fund to launch a fund raise this week in response to strong investor demand for high-yielding asset-backed securities (ABS).
The £883m investment company, whose shares yield 9.7% after consistently beating its dividend targets since launch in 2013, has announced a two-week share placing and open offer for subscriptions. The new shares will be priced at 2% above net asset value in line with the current share price of 114p which stands 2% over NAV.
The offer closes on 16 October. Existing shareholders can buy one new share, free of stamp duty, for every five they hold. No target amount for the share issue has been announced with the number of new shares issued to be determined in response to demand and market conditions.
Chair Bronwyn Curtis said: “Further to the growth of the asset class, as outlined in the prospectus published today, the company’s portfolio manager sees significant investment opportunities in the ABS sector, both within its existing investment remit and beyond. The board is supportive of the portfolio manager’s investment approach and its ability to continue to deliver attractive risk-adjusted returns.”
Aza Teeuwen, the closed-end fund’s portfolio manager at TwentyFour Asset Management, said: “Notwithstanding market developments, our strategy remains focused on investing in secured assets, working with established lenders with long-term track records. We continue to value liquidity and flexibility in our portfolios, with the aim of delivering consistent and attractive returns.”
The prospectus also details a three-year realisation facility for investors who want to sell their shares back to the company at a 2% discount below NAV.
An extraordinary general meeting to approve the share isssue will take place on 17 October. There will also be votes on amendments to the investment policy. These include adding the US and Australia to the “predominant” regions of investment and removing the 10% limit on ABS exposure from countries outside the UK and Europe.
In July TwentyFour Income reported a 3.7% rise in net asset value for the year to 31 March. With 11.07p of quarterly dividends, up from 9.96p, the total underlying investment return for the year was 13.6%, comfortably ahead of the 6%-9% annual target TFIF has met since flotation 12 years ago.
Over five years it has delivered a total return including dividends of 67% to shareholders. Over 10 years this rises to 88.6%.
Earlier this week CVC Income & Growth (CVCG), a £197m, 7.6%-yielding loan and bond fund, launched a £60m share issue.
