Aurora Investment Trust plc, a formerly sleepy, London-based investment trust that has seen its share price climb sharply following the appointment of a new manager last year, is targeting financial intermediaries with a fund-raising scheduled for later this month.
The investment trust was founded in 1997, and since 2011 has had as its chairman Howard Flight, pictured, a member of the House of Lords and former member of Parliament and occasional government minister, whose numerous other current interests include directorships with Investec and Metro Bank, and being a commissioner of the Guernsey Financial Services Commission.
Managed since January 2016 by Phoenix Asset Management Partners – a Barnes, London-based manager – Aurora Investment Trust invests exclusively in UK equities, such as Lloyds Banking Group, Barrett Developments, Sports Direct and most recently, Easyjet.
It says it typically holds no more than 20 holdings at a time, all of which are, like itself, listed on the London Stock Exchange.
Like Phoenix, which also runs its own flagship vehicle known as the Phoenix UK fund, Aurora calls itself a “long term, value investor” and notes on its website that it is “known for the depth of our research”.
Aurora’s annualised return from 2010 to the end of 2015 was virtually non-existent, but since Phoenix took over, the discount at which the share price was trading compared to the underlying value of the assets disappeared, and the value of the assets have risen as well, giving shareholders who invested when the manager changed in January 2016 returns of 25%.
Aurora is invested in the same holdings and uses the same investment approach as the Phoenix UK fund, which has returned 10% annualised since it was launched in 1998.
1.25% premium to NAV
In its announcement to the London Stock Exchange earlier this week of its planned share offering, Aurora Investment Trust said the price of the shares will be at a 1.25% premium to the trust’s net asset value as of 26 September. The investment trust’s shareholders will vote on whether to approve the planned fund-raising on 28 September.
Aurora said it is conducting the share placement and subscription to “increase the size of the company, and in turn give it a larger equity base over which to spread [its] fixed costs, while also improving the liquidity and marketability of the ordinary shares”.
In a statement accompanying the announcement of the planned fund-raising, Lord Flight noted the significant boost to Aurora’s performance that the appointment of Phoenix Asset Management Partners in January 2016 had resulted in, as well as the consequent 25% increase in its share price and fact that “the company [is today] trading consistently at a premium to net asset value”.
It closed on yesterday at 202.5p, when its NAV stood at 199p.
“At the same time, investment growth and share issuance has meant the company has increased in size from a £15m market cap in January 2016 to approximately £73m, thereby putting the company on a much sounder footing and reducing costs per share,” Lord Flight added.
Issuing more shares in the manner being proposed, he went on, “should make [Aurora Investment Trust] more accessible to shareholders and broaden the investor base, further increasing the marketability of the shares.”
‘Max 150 million new shares’
Aurora hasn’t said exactly how many new shares it plans to issue, but said shareholders will vote on giving the board the authority to issue up to a maximum of 150 million new shares over the next year.
Among the intermediaries it says have signed up to offer the shares to their clients are AJ Bell, Alliance Trust Savings Ltd, Redmayne Bentley Stockbrokers, Saga Share Direct, Selftrade, Shareeview and The Share Centre.
Aurora shares were trading at 202.8p Friday, up 0.3p from their 202.5p closing on 4 September, the day before the announcement to the London Stock Exchange of the planned fund-raising.