Liontrust Asset Management is set to expand its offering into investment trusts for the first time with the IPO of an ESG trust, targeting a £150m fundraise.
The Liontrust ESG trust (ESGT) will list ordinary shares on the premium segment of the main market of the London Stock Exchange with the intention of raising £150m via its initial issue.
Managed by the Liontrust sustainable investment team's Peter Michaelis, Simon Clements and Chris Foster, ESGT will invest in a diversified portfolio of 25 to 35 sustainable companies, which the management team believe will capitalise on and help drive the key structural growth trends shaping the sustainable global economy of the future.
Key attractions include the wide opportunity set it provides as it is unconstrained by market capitalisation, a concentrated portfolio focused on the highest sustainability companies and the chance to invest a portion of the portfolio in small cap companies that we do not hold in our open-ended funds."
Investee companies will provide or produce sustainable products and services, and have a progressive approach to the management of environmental, social and governance issues.
The management will target "key structural growth trends" of better resource efficiency, greater safety and resilience, and improved health, in addition to 21 underlying themes.
Michaelis and Clements have managed sustainable global growth strategies since 2001 and 2010 respectively, while Foster became a co-manager in 2020 after joining the team in 2015.
The portfolio will be unconstrained by market capitalisation when selecting investments, enabling the construction of a "high-conviction portfolio with less consideration of shorter-term volatility than when managing open-ended funds," Liontrust said.
It is expected that ESGT will have exposure to small-cap stocks that are not held by the open-ended funds the team currently manage.
Liontrust will collect a management fee of 0.65% per annum of net assets, but will donate up to 10% of its fees to fund research identifying and developing financial instruments covering currently "uninvestable SDGs".
"When these instruments are developed, they will become available for the company and other investors," Liontrust explained.
The trust's prospectus is set to be published in late May and the initial issue will close in late June, with a placing programme allowing the company to issue up to a further 250 million ordinary shares and/or C shares.
Chief executive of Liontrust John Ions said: "This is a significant launch for Liontrust in expanding our offering into investment trusts.
"The launch of ESGT recognises the growing demand for sustainable investment as an increasing number of people want their investments to make positive contributions to society, the environment and the economy.
"Over the past two decades, the sustainable investment team has demonstrated the ability of its investment process to outperform mainstream funds and the impact of its funds on sustainable development."
Portfolio manager Michaelis added: "We are excited by the opportunities that ESGT offers in being able to construct a high conviction portfolio with companies from across the market cap spectrum and our sustainable investment themes.
"Key attractions include the wide opportunity set it provides as it is unconstrained by market capitalisation, a concentrated portfolio focused on the highest sustainability companies and the chance to invest a portion of the portfolio in small cap companies that we do not hold in our open-ended funds.
"These stocks fit perfectly with our focus on the long-term drivers of the sustainable economy of the future."
First published by our sister title Investment Week