Investment company H1 2022 review

Existing companies raise £4 billion in a challenging full half

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Just over £4bn was raised by existing investment companies in the first six months of 2022, according to figures released today by the Association of Investment Companies (AIC).

Despite the challenging market conditions, this was the third-highest amount of fundraising by existing companies (known as ‘secondary fundraising’) in the first six months of a year. The highest amount of secondary fundraising was in H1 2021, when £5.1bn was raised1.

Of the £4.04bn raised by existing investment companies, the Renewable Energy Infrastructure sector led the way raising £1.2bn, followed by Infrastructure (£621m) and then Property – UK Commercial (£557m).

The largest fundraisings by existing companies were completed by International Public Partnerships (£326m) in the Infrastructure sector, Supermarket Income REIT (£307m) in the Property – UK Commercial sector and Renewables Infrastructure Group (£277m) in the Renewable Energy Infrastructure sector.

There were no investment company IPOs on the London Stock Exchange in the first half of the year, as market conditions proved difficult for new entrants. The AIC welcomed a new member, Superseed Capital, which launched on the Aquis Exchange at the end of January 2022 raising £2m.

Boards continued to negotiate fee changes to benefit shareholders in the first half of the year with 14 investment companies making amendments such as lowering management fees, introducing tiered fees and abolishing performance fees.

Industry assets stood at £265bn at the end of May 2022, down from a record high of £278bn at the end of November 2021 (asset figures for June 2022 will be released shortly).

Richard Stone, Chief Executive of the Association of Investment Companies (AIC), said: “Rising inflation, tight labour markets and the war in Ukraine with its knock-on impacts on supply chains and fuel costs have made this a challenging year so far for capital markets. Nevertheless, the first half of the year saw healthy fundraising by existing investment companies, at a similar level to 2019. Demand was particularly strong in sectors such as infrastructure and property, which can help protect investors’ portfolios from inflation. The investment company structure is well suited to these assets, providing permanent capital so managers can take a long-term view of their portfolio and are never forced sellers.

“Fee reductions have continued to be a theme in 2022, with 14 investment companies making fee amendments to benefit shareholders. Independent boards are an important benefit of investment companies over other types of fund and negotiating lower fees for shareholders is just one of the ways in which they demonstrate their value.”

Mergers and asset management changes

In March UK Mortgages merged with TwentyFour Income. In addition, Global Opportunities became self-managed, having previously been managed by Edinburgh Partners.

Fundraising by existing investment companies: top sectors

AIC sector

Secondary fundraising total (£m)

Renewable Energy Infrastructure

1,208

Infrastructure

621

Property – UK Commercial

557

Flexible Investment

513

Property – UK Residential

278

Source: AIC/Morningstar. Secondary fundraising = fundraising by existing companies (excludes IPOs). Closed issues admitted to trading only. Excludes VCTs and shares reissued from treasury.

Fundraising by existing investment companies: top companies

Investment company

Secondary fundraising total (£m)

International Public Partnerships

326

Supermarket Income REIT

307

Renewable Infrastructure Group

277

Home REIT

263

LXi REIT

250

Source: AIC/Morningstar. Closed issues admitted to trading only. Excludes VCTs and shares reissued from treasury.

 

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Notes to editors

  1. In the first half of 2022, a total of £4.037bn was raised from existing investment companies (secondary fundraising). In the first half of 2021, £5.1bn was raised in secondary fundraising, and in H1 2019, £4.045bn was raised.
  2. The Association of Investment Companies (AIC) was founded in 1932 to represent the interests of the investment trust industry – the oldest form of collective investment. Today, the AIC represents a broad range of closed-ended investment companies, incorporating investment trusts and other closed-ended investment companies and VCTs. The AIC’s members believe that the industry is best served if it is united and speaks with one voice. The AIC’s mission statement is to help members add value for shareholders over the longer term. The AIC has 360 members and the industry has total assets of approximately £265 billion.
  3. Disclaimer: The information contained in this press release does not constitute investment advice or personal recommendation and it is not an invitation or inducement to engage in investment activity. You should seek independent financial and, if appropriate, legal advice as to the suitability of any investment decision. Past performance is not a guide to future performance. The value of investment company shares, and the income from them, can fall as well as rise. You may not get back the full amount invested and, in some cases, nothing at all.
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