‘Best of British’ trust pulls plug on IPO due to low demand

Time will tell whether the two other planned UK trust launches get off the ground. 

The planned launch of the Tellworth British Recovery & Growth Trust (TBRGT), which was aiming to raise £100 million, has been abandoned.

In a stock exchange announcement this morning (8 October), Tellworth Investments said “the overall level of demand was insufficient to meet the minimum fund size” it had as a target.

Tellworth Investments told the market: “While the investment proposition and investment team have been very well received by discretionary wealth managers and intermediary retail platforms, the overall level of demand was insufficient to meet the minimum fund size as set out in the prospectus issued by the company on 16 September 2020.”

Poor sentiment towards the UK as an investment destination will have played a big part in Tellworth Investments failing to hit its fundraising target. The UK stock market has been notably out of favour for the past year or so with both UK retail investors and institutional investors. Investors are shying away for a number of reasons, including uncertainty over the shape and form Brexit will take, concerns over the short and long-term economic impact of Covid-19 and the dividend drought.  

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According to data from the Fund Flow Index run by global funds network Calastone, a net £1.2 billion flooded out of UK-focused equity funds between June and August, in the worst showing the index has ever recorded. The outflows over the period even dwarf those seen in the aftermath of the UK referendum on EU membership.

Another factor at play is that two other planned UK trust launches were announced towards the end of September. Tellworth Investments was first out of the blocks, intending to launch in early September, but was subsequently joined by Buffettology Smaller Companies investment trust (BSCIT) and Schroder British Opportunities Trust. The additional competition for investors’ cash will not have helped Tellworth Investments’ fundraising efforts.

BSCIT is looking to raise £100 million and will be managed by Keith Ashworth-Lord, manager of CFP SDL UK Buffettology, one of interactive investor’s Super 60 funds. It will follow the same business-perspective investing approach in which Ashworth-Lord looks, among other things, for businesses with an enduring franchise that have pricing power and an economic moat.

The Schroder British Opportunities Trust, which is seeking to raise £250 million, will focus on small and medium-sized UK companies with sustainable business models.

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