New emerging market trust raising money: everything you need to know

Ashoka WhiteOak Emerging Markets Trust is seeking to raise £100 million.

Investors have the chance to back a new emerging markets investment trust ahead of IPO.

Ashoka WhiteOak Emerging Markets Trust, managed by emerging markets specialist fund manager WhiteOak Capital partners, is seeking to raise £100 million from investors for a trust that will buy between 100 and 200 emerging market shares.

WhiteOak has been selected by Acorn Asset Management, a Mauritius-based investment firm, to run the portfolio. 

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Acorn and WhiteOak also teamed up to manage the Ashoka India Equity Investment Trust, which has returned 74% since launch in 2018 compared with 36% for the typical Indian stocks trust, according to data from FE FundInfo. WhiteOak overseas $5.5 billion (£4.45 billion) in total and is based in Singapore.

The team's investment philosophy is that strong returns are earned over time by investing in great businesses at attractive valuations.

They are bottom-up investors, looking to buy high-quality businesses, focusing on those that generate superior returns on capital, are scalable, and are well managed, rather than relying on macroeconomic factors to determine what to buy.

WhiteOak argues that now is a compelling time to be buying emerging market shares. It says that valuations are presently at multi-year lows relative to developed markets, with generally lower inflation, lower debt levels, and higher growth rates.

In addition, it believes emerging market economies offer strong domestically driven growth as well as a growing share of world exports backed by large economies and young populations.

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Furthermore, per capita income has more than doubled over the past two decades, increasing domestic demand for discretionary goods, travel and leisure, financial and healthcare services, WhiteOak says.

Commenting on the intention to float, Prashant Khemka, founder of WhiteOak, said: “We are excited by the prospect of listing AWEM on the London Stock Exchange. This easily accessible vehicle will provide investors exposure to emerging markets and the opportunity to generate significant alpha through exposure to a portfolio of great companies at relatively attractive valuations.

“Our well-resourced investment team has the credentials and expertise that place us in a unique position to achieve strong capital growth for shareholders. We look forward to building a new listed entity in London.”

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There is no ongoing fixed management fee, with a 30% fee levied only on returns above the MSCI Emerging Markets index over three-year blocks.  Therefore, the manager takes a fee only if they beat their benchmark after three years.

The trust will have a discount control mechanism, allowing shareholders an annual opportunity to redeem part or all of their shareholding at net asset value.

The offer closes on 28 April 2023 at 9am, with a minimum investment of £1,000. Shares will be issued at 100p. If the fund raise is successful, it will begin trading on 3 May 2023 under the stock ticker AWEM.