Secondary listings for investment companies have not been in vogue in several years with many ditching historic listings due to expense. But the tide may be shifting as two trusts have recently joined 15 of their peers and entered an international market.

Primary Health Properties (PHP ) and Aquila European Renewables (AERI ) have both announced they will, or have, listed on a second exchange. PHP will list on the Johannesburg Stock Exchange from 24 October, while AERI listed on Dublin’s Euronext on 2 October.

Iain Scouller, analyst at Stifel, said the moves were ‘unusual’ nowadays.

The analyst commented that 10 or 15 years ago a number of the newer alternative funds opted for a second listing in order to expand their investor base. Some of these still hold them, such as Pershing Square (PSH ) and Tetragon Financial (TFG ), but Scouller said many of the closed-end funds ‘found there was little activity and liquidity on these overseas exchanges’.

He pointed to Harbourvest (HVPE ) which was listed on Amsterdam’s Euronext exchange but de-listed in 2016 citing cost-savings and less administration.

‘It is a bit surprising Aquila is going down this road,’ he said.

Numis analyst Justin Bell also understood the motivation of AERI given all the assets were in euros and the investment manger is well-established in Germany, but added that it ‘may require some educating’ as European investors are less familiar with investment company structure.

Lars Meisinger, head of client advisory at the investment manager Aquila Capital, said in evaluating the move the board found the benefits ‘clearly’ outweighed the costs.

The €403m (£351m) AERI, which listed on the London Stock Exchange in June 2019, is trading on a 25.8% discount and its board and management are hopeful marketing it in Europe will help move the dial.

Meisinger said since listing they have found that retail investors have a preference for their home currency and exchange rate movements have meant its Euro traded shares are not as attractive. He said less than 20% of its register were shareholders, which is impacting its liquidity.

The trust, which already has some Dublin-based investors, believes the new listing will attract both retail and institutional investors from Europe who will be attracted by the company being offered in their base currency.

Meisinger told Citywire that while the outcome ‘remains to be seen’ the trust believed ‘standing still is not an option’. He added that while the trust will continue to market in the UK, it was a ‘long-term exercise’ as the investment manager’s brand was not well established and so they need to build brand recognition.

For its part £109m PHP said South African investors have ‘already shown strong interest’ in the company and they too are hopeful the move will boost their liquidity.

Justin Bell, analyst at Numis, pointed out that some South African investors have a requirement to invest in locally listed stocks but are looking for offshore asset exposure.

‘Clearly new buyers lead to higher share prices so it’s good for existing holders and companies,’ he said.

The downside, Bell said, is once on the register they may be motivated to sell for reasons related to local politics or currency rather than fundamental to the company therefore introducing ‘another moving part and potential for volatility’.

PHP is not alone in its bid for South African investors, several other property companies, including investment company Schroder European Real Estate (SERE ), are listed on this market.

Annabel Brodie-Smith, communications director of the Association of Investment Companies, said a secondary listing can be beneficial as it can increase demand and liquidity, but it was not a ‘silver bullet’ to addressing the issues.

‘Performance and all the other factors which make up the investment case for an investment company are still critical when attracting investors on a new exchange,’ she commented.

The current cohort

The two investment companies join a small cohort of 15 others with an overseas listing, the majority of which are historic. 

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Company name	AIC sector	Secondary listing date (if known)	Total assets (£m)	Exchange
Bankers (BNKR )	Global	1995	1,530	New Zealand
City of London (CTY )	UK Equity Income	1996	2,034	New Zealand
Henderson Far East Income (HFEL )	Asia Pacific Equity Income	2006	390	New Zealand
Templeton Emerging Markets (TEM )	Global Emerging Markets	1994	2,033	New Zealand
F&C Investment Trust (FCIT)	Global	-	5,382	New Zealand
Boussard & Gavaudan Holding (BGHS )	Hedge Funds	2008	285	Amsterdam
NB Private Equity Partners (NBPE )	Private Equity	2009	1,106	Amsterdam
Pershing Square Holdings (PSH )	North America	2017	10,755	Amsterdam
Tetragon Financial Group (TFG )	Flexible Investment	2015	1,985	Amsterdam
Volta Finance (VTA )	Debt - Structured Finance	-	204	Amsterdam
Greencoat Renewables (GRP )	Renewable Energy Infrastructure	2017	1,590	Ireland
Canadian General Investments (CGI )	North America	-	851	Toronto
CATCo Reinsurance Opportunities (CAT )	Insurance & Reinsurance Strategies	2011	9	Bermuda
Literacy Capital (BOOK )	Private Equity	2021	293	Cayman Islands
Schroder European Real Estate (SERE )	Property - Europe	2015	215	South Africa

 Source: AIC and Morningstar 

Included on the list are several long-standing equity trusts, including Bankers (BNKR ), City of London (CTY ) and F&C (FCIT), which have New Zealand listings.

Previously, there was a tax advantage for New Zealand residents to invest in trusts and trusts found their shares were in demand. However, this tax benefit is no longer in place, leading some companies to de-list, including JP Morgan Global Growth & Income (JGGI ).

JGGI left the New Zealand Stock Exchange in June 2023 as investors in the country only held 1.25% off issued shares and they had seen trading in New Zealand deplete over recent years.

When the delisting was announced the board said ‘administrative and compliance burdens of maintaining a secondary listing in New Zealand have become disproportionate to the benefits of maintaining that listing’ and there would be a significant cost reduction.

Amsterdam Euronext is another popular listing with five trusts on the exchange. 

Not included on the list are seven companies which have a listing on Guernsey’s International Stock Exchange.

Craig Martin of Vietnam Holding (VNH ) said the listing is ‘technical’ and is often part of the process for a Guernsey domiciled company. The index does not have much trade activity and the listing costs £2,000 per year.