F&C Private Equity Trust has completed its GBP30m zero dividend preference share issue.
The zeros have been issued with a five-year life and a gross redemption yield of 8.75 per cent.
F&C Private Equity Trust is a diversified investment trust that invests in private equity funds and direct investments. It focuses on the mid-sized segment of the European buyout market, which despite the challenges facing the private equity sector in general is increasingly seen as an attractive area.
The trust funds the drawdown of commitments to private equity funds from a combination of the proceeds of realisations and bank borrowing. Although realisations have held up well during 2009, the banking sector’s troubles have made it difficult to increase borrowing facilities.
The issue of zeros will enable the company, managed by Hamish Mair (pictured) at F&C Investments in Edinburgh, to fund drawdowns of commitments over the next few years.
Mair says: “We had been looking at ways to improve our capacity to finance our ongoing undrawn commitments. In normal circumstances we would have increased our bank borrowing, but these are not normal circumstances – banks are seriously constrained from advancing additional lending at present, and private equity listed vehicles are affected by this along with everyone else.
“It was important that we could demonstrate to our shareholders that we had enough capital to meet our commitments as they are drawn down, and a zero dividend preference share issue was one of the more accessible routes to achieving that.
”We are pleased to have raised the full GBP30m we had targeted, particularly as ours was the third such issue in just a couple of weeks.”
