Record fundraising for investment companies in 2021 helped propel the investment trusts industry to its highest ever level of assets under management, data from the Association of Investment Companies reveals.
Far exceeding the previous fundraising record, £14.8 billion of new money has been raised for investment companies in the year to date, including £3.8 billion in 16 IPOs, most recently ThomasLloyd Energy Impact Trust whose shares were admitted to trading 14 December.
The previous record was set in 2014 when £10.2 billion was raised.
Top five investment company IPOs of 2021 by assets (£m)
- Petershill Partners (October – £1,023)
- Pantheon Infrastructure (November – £400)
- Cordiant Digital Infrastructure (February – £370)
- Life Science REIT (November – £350)
- Digital 9 Infrastructure (March – £300)
A record for secondary fund raisings as well
The £11.1 billion raised by existing investment companies in so-called secondary fundraising was also a record, the previous high being £7.4 billion in 2019.
Fundraising was led by investment companies in the Renewable Energy Infrastructure sector which raised £3.4 billion between them, including £874 million in six IPOs. This was followed by the Infrastructure and Growth Capital sectors, which raised totals of £2.1 billion and £2.0 billion respectively.
Largest secondary fund raisings (existing investment companies)
- Greencoat UK Wind (£648m)
- Schiehallion (£503m)
- Smithson (£497m)
- Digital 9 Infrastructure (£450m)
- Renewables Infrastructure Group (£440m)
Industry assets stood at £277.6 billion at the end of November, an all-time high.
Investment company mergers
2021 was a year of investment company mergers with five deals completed, the same as the number of mergers in the previous five years (between 2016 and 2020 inclusive), and the most mergers in a year since AIC records begin. A sixth merger has been approved by shareholders of Scottish Investment Trust with JPMorgan Global Growth and Income.
Five changes of management group also became effective during the year, with two more announced.
Investment company mergers completed in 2021
- Invesco Select UK Equity & Invesco Income Growth (April)
- City Merchants High Yield & Invesco Enhanced Income (May)
- BH Macro & BH Global (July)
- Aberdeen Emerging Markets & Aberdeen New Thai (November)
- Custodian REIT & Drum Income Plus REIT (November)
Boards were active in negotiating fee reductions on shareholders’ behalf. A total of 31 investment companies made fee changes to benefit shareholders.
The average investment company generated a share price total return of 14.7% between 1 January and 10 December. The Property – UK Logistics sector performed best over this period with a 45.0% return.
“It has been an enormously busy year for investment companies, most notably on the fundraising front, with a record £14 billion raised, but also for mergers, management group changes and fee reductions,” Richard Stone, Chief Executive of the Association of Investment Companies (AIC). “While strong fundraising is a vote of confidence in the investment company structure, especially for investing in less liquid assets such as green infrastructure and growth capital, fee reductions and manager changes are welcome signs of boards exerting their independence to make sure shareholders are getting the best deal.”
The record number of mergers this year suggests that investment company boards are also responding to investor demand for larger, more liquid investment companies that can deliver the benefit of economies of scale to shareholders, Stone said.