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Tech trust plans to issue new shares to keep lid on premium

Tech trust plans to issue new shares to keep lid on premium

by Kyle Caldwell from interactive investor | 13th August 2020 13:32

Allianz Technology Trust (LSE: ATT) is seeking shareholder approval to increase the number of new shares it can issue to keep its premium under control.

The trust, managed by Walter Price, has put in a strong showing so far in 2020, with its recently published interim results to the end of June reporting a share price return of 36.9% and a net asset value (NAV) return of 36.7%. The performance outshone the trust’s benchmark, the Dow Jones World Technology index, which in sterling terms returned 22.4%…

The board of Alliance Technology Trust notes since its last general meeting on 19 May that the trust has traded on an average premium of 1.04%. At present, the premium stands at 2.9%.

In order to satisfy investor demand and ensure the premium does not overheat, the board has since 19 May issued over 2.7 million shares at a premium to the prevailing NAV at the time of issue. In turn, this has raised over £60.4 million of new capital.

The board is proposing to issue more shares of up to 10% of the company’s issued share capital. The trust’s total assets stand at £949 million…

Matthew Read, senior analyst QuotedData, says: “Existing shareholders should benefit from this growth (increased liquidity and reduced costs), so there’s no real reason to say no. However, while the world is showing signs that it is getting to grips with the pandemic, the growth outlook remains poor. Investors’ appetite for technology trusts is likely to remain strong, so don’t be too surprised if they come back again asking for permission to issue more.”

Read more here

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