Placing and UK Offer for Subscription of C Shares

RNS Number : 0390P

BACIT Limited

26 September 2013

 



NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, TO US PERSONS OR IN, INTO OR FROM THE UNITED STATES, AUSTRALIA, CANADA, JAPAN, THE REPUBLIC OF SOUTH AFRICA, SINGAPORE OR HONG KONG.

This announcement is an advertisement and not a prospectus. This announcement does not constitute or form part of, and should not be construed as, any offer for sale or subscription of, or solicitation of any offer to buy or subscribe for, any securities in BACIT Limited (the "Company") or securities in any other entity, in any jurisdiction, including the United States, nor shall it, or any part of it, or the fact of its distribution, form the basis of, or be relied on in connection with, any contract or investment decision whatsoever, in any jurisdiction. This announcement does not constitute a recommendation regarding any securities. Any investment decision must be made exclusively on the basis of the prospectus (the "Prospectus") to be published by the Company and any supplement thereto.

Unless the context requires otherwise, defined terms in this announcement shall have the meanings given to them in the Prospectus to be published by the Company.

26 September 2013

BACIT LIMITED

PLACING AND UK OFFER FOR SUBSCRIPTION OF C SHARES

Introduction

The Board of BACIT Limited (the "Company") today announces an issue of C Shares by the Company by way of a placing and offer for subscription (the "Issue"). The Company is targeting raising £100 million pursuant to the Issue.

The Company's investment objective is to deliver superior returns from investments in leading long-only and alternative investment funds across multiple asset classes targeting an annualised return per Share of between 10 and 15 per cent. per annum.[1]

All investments made by the Company are either (1) not subject to management or performance fees or (2) made on the basis that the Company is effectively reimbursed the amount of any such fees by rebate, donation back to the Company or other retrocession arrangements.

In addition, the Management Team provide their services free of charge to Shareholders.

One per cent. of Total NAV over the course of the year is donated annually to charity, with half donated to The Institute of Cancer Research (the "ICR") and half donated to the BACIT Foundation, which (net of running expenses) grants those funds to charities named in a list of charities proposed annually by the BACIT Foundation (including the ICR) in proportions determined each year by investors in the Company.

In addition to the charitable component, the Company has the right to invest up to one per cent. of Total NAV each year to acquire interests in drug development and medical innovation projects undertaken by the ICR or its subsidiaries which have the potential for commercial development and application.

The Company may pay a dividend at the discretion of the Board. The Board targets dividends of two per cent. per annum of NAV.

Reasons for the Issue

The Company has made a strong start since its listing on 26 October 2012. From its launch to 31 July 2013, the Company's unaudited NAV total return was 15.13 per cent.

The Management Team intend to use the C Share proceeds in part to introduce new managers to the portfolio, which should complement the existing portfolio and which should provide the Company with exposure to geographic areas and asset classes which have hitherto not formed part of its portfolio.

The New Managers

 

Salt Rock Capital Partners, owned and managed by Mark Painting, has a global macro strategy focused on North America and Northern Europe. The ability to invest with Salt Rock Capital Partners should give the Company access to investing in rates and foreign exchange and the opportunities created by the unwinding of quantitative easing on both sides of the Atlantic.

Hall Commodities LLP, owned and managed by Tony Hall and Arno Pilz, should provide the Company with exposure to oil and metals trading, principally West Texas Intermediate crude oil, Brent and industrial metals. This should give the Company access to the opportunities created by the shale revolution, the evolving Arab Spring, and the rebalancing of the Chinese economy.

Portland Hill Capital is owned and managed by Thierry Lucas. Portland Hill Capital manages the Portland Hill Overseas Fund Limited which invests primarily in European equities, long-short, with a particular focus on event-driven situations. This fund should increase the Company's exposure to the European recovery without necessarily increasing the Company's long bias.

Lancashire Holdings Limited, founded by Richard Brindle in 2005, is establishing a new third party capital management arm to manage a new fund which, when established, should give the Company access to attractive risk-adjusted returns from an asset class minimally correlated to any other. Its managers, including the portfolio manager Darren Redhead who has 30 years' industry experience, have broad industry expertise and their deep resources should permit focus on profitable investment strategies including combined peril underwriting.

The New Managers set out above have agreed to make capacity available to the Company on a basis which is compatible with the Company's investment policy.

The Management Team also intend to make follow-on investments into some of the funds in which the Company is already invested, taking advantage of hitherto unused "gross return" investment capacity which is still available to it. Given that a number of these funds will close to further subscription in the coming months, these are opportunities which will shortly no longer be open to the Company, which the Management Team believe would be a loss to the Company's future returns.

Funds in which the Company is already invested

	% of NAV (as at 31 July 2013)
Majedie Asset UK Equity Fund	8.2%
CG Portfolio Fund plc Dollar Fund	6.5%
Maga Smaller Companies Fund	6.3%
Sinfonietta	5.2%
BlackRock UK Special Situations Fund	5.1%
Tower Fund	5.0%
The SFP Value Realization Fund	4.6%
Armajaro AIMS Diversified Fund	4.1%
Polar Capital Japan Alpha Fund	4.1%
Chenavari Bank Regulatory Capital Strategy	3.9%
S.W. Mitchell European Fund	3.9%
Cumulus Energy Fund	3.8%
Polygon Mining Fund	3.3%
Polygon European Equity Opportunities Fund	3.3%
WyeTree RRETRO Fund	3.2%
Polygon Convertible Opportunity Fund	3.1%
WyeTree Yield Distribution Fund	2.9%
M&G Infracapital Partners II	2.7%
Thyra Global Technology Fund	2.6%
Russian Prosperity Fund	2.2%
Chenavari European Real Estate Debt Strategy	2.0%
BlackRock Natural Resources Growth & Income Fund	1.7%
Henderson Agricultural Fund	1.5%
Prosperity Russia Domestic Fund	1.5%
Optimal Australia Absolute Fund	1.4%
SW Mitchell Emerging European Fund	0.9%
Baker Steel Genus Dynamic Gold Fund	0.7%
Permira V	-
WyeTree European Recovery Fund	-

Notes: The M&G Infracapital Partners II position does not reflect the full £15m commitment by the Company. The Company has made a €18.7m commitment to Permira V, which is undrawn. The Company invested £3.1m in WyeTree European Recovery Fund on 23 September 2013.

Increasing the Company's size will also have the effect of increasing the amount that the Company donates to charity every year. A larger Company should also mean that the Company's fixed running costs will be spread across a wider capital base and should also enhance the secondary liquidity in the Company's Shares.

The Prospectus will include details of the Issue and a description of the terms of, and risk factors regarding an investment in, the C Shares. 

Extraordinary General Meeting

Four resolutions will be put to Ordinary Shareholders at an extraordinary general meeting of the Company to be held on 22 October 2013 (or any adjournment thereof).

Under resolution 1, Ordinary Shareholders will be asked to authorise the Directors to allot and issue the C Shares pursuant to the Issue. Under resolution 2, Ordinary Shareholders will be asked to disapply shareholder pre-emption rights in connection with the Issue for a period concluding on 31 December 2013.

Resolution 2 is subject to the passing of resolution 1.

Under resolution 3, the Company will propose to amend its Articles to allow the Directors to decide that, in relation to any dividend, receipt of a scrip dividend should be the default position for Ordinary Shareholders, unless individual Ordinary Shareholders elect instead to receive the cash dividend.

Under resolution 4, the Company will propose to amend its Articles to clarify the definition of ''non-qualified holder'' as it applies to compliance with the US Foreign Account Tax Compliance Act ("FATCA") and to specify the type of information that may be required for compliance with FATCA.

The Issue

With an Offer Price of £1 per C Share, the opening NAV per C Share (assuming an Offer size of £100 million) is expected to be 98.6 pence.

In the event that the Offer is oversubscribed, the Global Coordinator intends to allocate C Shares in the Placing so that applications from existing Shareholders are given priority over other applicants, with a view to existing Shareholders being allocated such percentage of C Shares as is as close as possible to their percentage holdings of Ordinary Shares. Existing Shareholders will not, however, be entitled to any minimum allocation of C Shares in the Placing and there will be no guarantee that existing Shareholders wishing to participate in the Placing will receive all or some of the C Shares for which they have applied. Further, the Global Coordinator will have absolute discretion (after consultation with the Company) to determine the proportion of C Shares allocated to each person wishing to participate in the Placing.

The C Shares will convert into New Ordinary Shares, which will rank pari passu in all respects with the existing Ordinary Shares, at the Conversion Time and on the basis as will be set out in the Prospectus. Conversion is anticipated to take place by 31 January 2014 and in any event no later than 31 March 2014. The Conversion Ratio will be calculated when at least 70 per cent. of the assets attributable to the C Shares have been invested, or at such other time as determined by the Directors, by reference to the net asset values attributable to the C Shares and the Ordinary Shares and according to the Conversion terms as set out in the Prospectus.

The dealing codes for the C Shares and the Ordinary Shares into which they convert are as follows:

	C Shares	Ordinary Shares
ISIN	GG00BDZDGG20	GG00B8P59C08
SEDOL	BDZDGG2	B8P59C0
Ticker	BACC.L	BACT.L

Further information relating to the Issue and the terms of the C Shares will be set out in the Prospectus.

Expected Timetable

Latest date for receipt of Public Application Forms and payment in full under the Offer for Subscription	11.00 am on 21 October 2013
Last date for receipt of applications for C Shares in the Placing	Midday on 22 October 2013
Extraordinary General Meeting	2.00 pm on 22 October 2013
Announcement of the results of the Offer through an RIS provider	22 October 2013
Admission and commencement of unconditional dealings on the London Stock Exchange	8.00 am on 28 October 2013
CREST stock accounts credited (where applicable)	28 October 2013
Despatch of definitive share certificates (where applicable)	Week commencing 11 November 2013

Prospectus

Once published, the Prospectus relating to the Company and prepared in accordance with the Prospectus Rules in connection with the Issue and the applications for Admission will be submitted to the National Storage Mechanism and will be available for inspection at: www.morningstar.co.uk/uk/nsm

The Prospectus will also be available at www.bacitltd.com

In addition, once published, copies of the Prospectus will be available for collection, free of charge, during normal business hours up to 28 October 2013 from the Company's registered office at BACIT Limited, Trafalgar Court, Les Banques, St. Peter Port, Guernsey, GY1 3QL.

Shareholder Circular

The Company will post a circular to Shareholders advising them of the proposed Placing and Offer for Subscription. A copy of that circular will be submitted to the National Storage Mechanism and will be available for inspection at: www.morningstar.co.uk/uk/nsm.

Enquiries

William Simmonds                             

J.P. Morgan Cazenove

0207 588 2828

Rose Toussaint

Northern Trust

01481 745 381

Notes

J.P. Morgan Cazenove is acting exclusively for the Company and no one else in connection with the Offer and will not regard any other person (whether or not a recipient of this announcement) as its client and will not be responsible to anyone other than the Company for providing the protections afforded to clients of J.P. Morgan Cazenove nor for giving advice in relation to the Offer, the contents of this announcement or any transaction or arrangement referred to herein.

The Shares have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the "Securities Act") or any state securities laws in the United States or under the applicable securities laws of Australia, Canada, Japan, South Africa, Singapore or Hong Kong. Subject to certain exceptions, the Shares may not be offered or sold within Australia, Canada, Japan, South Africa, Singapore or Hong Kong. Further, the Shares may not be offered or sold directly or indirectly in or into the United States, or to or for the account or benefit of any U.S. person (as defined in Regulation S under the Securities Act). The Company has not been and will not be registered under the U.S. Investment Company Act of 1940, as amended (the "Investment Company Act") and investors will not be entitled to the benefits of that Act.

The ICR does not accept any responsibility whatsoever for the contents of this announcement or for any other statement made or purported to be made by it or on its behalf in connection with the Company, the Shares or the Offer.

This announcement may not be distributed, directly or indirectly, in or into or from the United States, Australia, Canada, Japan, South Africa, Singapore or Hong Kong or any other jurisdiction where to do so would constitute a violation of the relevant laws of such jurisdiction. This announcement does not constitute or form part of an offer to sell or issue, or any solicitation of an offer to buy or subscribe for, any securities referred to herein in the United States or in any other jurisdiction. The Offer and the distribution of this announcement and other information in connection with the Offer in certain jurisdictions may be restricted by law and persons into whose possession any document or other information referred to herein comes should inform themselves about and observe any such restriction. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction.

The price and value of securities may go up as well as down. Persons needing advice should contact a professional adviser.

Certain information contained in this announcement may constitute "forward-looking statements," which can be identified by the use of terms such as "may", "will", "should", "expect", "anticipate", "project", "estimate", "intend", "continue," "target" or "believe" (or the negatives thereof) or other variations thereon or comparable terminology. These forward looking statements include matters that are not historical facts and include statements regarding the Company's intentions, beliefs or current expectations concerning, among other things, the Company's results of operations, financial condition, liquidity, prospects, growth and strategies. Due to various risks and uncertainties, actual events or results or actual performance of the Company may differ materially from those reflected or contemplated in such forward-looking statements. As a result, investors should not rely on such forward-looking statements in making their investment decisions. No representation or warranty is made as to the achievement or reasonableness of and no reliance should be placed on such forward-looking statements. There is no guarantee that the Company will generate a particular internal rate of return.

By their nature, forward looking statements involve risk and uncertainty because they relate to future events and circumstances. A number of factors could cause actual results and developments to differ materially from those expressed or implied by the forward looking statements including, without limitation, the factors described in the risk factors section of the Prospectus. Save as required by law or by the Listing Rules of the Financial Services Authority, the Company undertakes no obligation publicly to release the results of any revisions to any forward looking statements in this announcement that may occur due to any change in its expectations or to reflect events or circumstances after the date of this announcement.

Information in this announcement or any of the documents relating to the Offer cannot be relied upon as a guide to future performance.

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[1] This is a target only and not a profit forecast. There can be no assurance that the target will be met and it should not be taken as an indication of the Company's expected or actual

 future results. Potential investors should decide for themselves whether or not this target rate of return for the Company is reasonable or achievable in deciding whether to invest in the Company.

 

END

 

 

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