Healthcare trust expands on plans to raise money to take advantage of cheaper valuations following recent market sell-off.
BB Healthcare (BBH) expects to raise around £131 million in its next planned share issue in December subject to demand and finalised issue price.
The £432 million investment trust, which invests in a concentrated portfolio of 28 stocks in the healthcare and biotech sector, is due to offer another round of ordinary shares on the London stock exchange on 3 December.
This assumed that 100 million shares would be issued in the latest fund raise, costing 131.4p per ordinary share, according to the issue price calculated at the close of business on the ‘latest practicable date’.
However, BBH said the issue price would be confirmed no later than 29 November and the placing could be increased to a maximum of 145 million ordinary shares should demand exceed the initial offer.
While BBH has not specified what area of the healthcare sector it would invest in, it wanted to take advantage of depressed company valuations as a result of the recent market sell-off.
The trust’s net asset value (NAV) slumped 15.5% last month as investors shunned healthcare and biotechnology stocks over concerns that the global economy may be slowing.
Over a year, however, the trust is the frontrunner in its sector for NAV total returns, delivering 24.8%, with yield of 3%.
On the back of this, managers of the Bellevue Asset Management trust - Paul Major, Daniel Koller and Brett Drake – issued an unscheduled portfolio update, announcing their plans for a share issue.
The managers said they in fact wanted to ‘capitalise on the short-term market dislocation’, emphasising their focus on companies with long-term growth prospects.
This latest fund raise through placing further distances BBH as the junior trust of the healthcare sector, having only launched in December 2016.
It has grown substantially since then through multiple share issues, raising £150 million at the initial share issue. Its pot then grew by a further £123 million with another share offer in November 2017 and has raised nearly £73 million.
BBH paid its first interim dividend of 1.75p per ordinary share in August 2017 and a final dividend of 1.75p for the first year of the trust in November 2017. For the six-month period to 31 May 2018, it then paid a dividend of 2p.
The trust’s chairman is Professor Justin Stebbing, a high-profile cancer surgeon who has reportedly treated Sir Michael Parkinson. He is also involved in studies at the Imperial College London into how diabetes drug metformin and painkiller aspirin could be used to battle cancer.
BBH has four other board members – Josephine Dixon, Randeep Grewal, Paul Southgate and Siddhartha Mukherjee – all with either experience in the biosciences and/or investment management sectors.