Smithson smashes investment trust IPO record

The global small- and mid-cap trust raised £822.5m, vastly exceeding its initial target of £250m. Recognising the strong demand for its shares, last week it increased the amount it was seeking to £600m, with the ability to increase this further to £900m. The trust will start trading on 19 October.

Smithson is managed by Fundsmith, the asset management company set up by Terry Smith in 2010, which also runs Fundsmith Equity (GB00B41YBW71), a global fund focused on larger companies. Smithson will be run by Simon Barnard and Will Morgan who recently joined the firm. 

Before the Smithson launch, Woodford Patient Capital Trust (WPCT) was the largest UK domiciled investment trust IPO, raising £800m in April 2015.

Analysts at broker Numis Securities said investors were keen to participate in Smithson’s IPO because they expect it to trade at a premium to net asset value (NAV) in the secondary market.  

“Smithson benefited from [being run by] a high-profile management group that is extremely popular with retail investors and wealth managers,” said Ewan Lovett-Turner, director of investment companies research at Numis. “[Fundsmith's only other trust] Fundsmith Emerging Equities Trust (FEET), has an uninspiring track record to date, with an annualised NAV return since IPO of just 2.5 per cent versus 7 per cent for MSCI Emerging Markets Index. However, investors may believe that the group’s investment approach is better suited to moving down the market capitalisation range, rather than moving into different geographies. The fact that the manager covered all launch costs will also have been an attraction to some investors.” 

Largest UK-domiciled investment trust launches

Source: Association of Investment Companies (AIC)