A “challenging year so far”: AIC releases investment company H1 2022 review

by | Jul 5, 2022


– 14 investment companies change fees to benefit shareholders

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 (pictured), 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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