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Key benefits of BlackRock fund listing on JSE

Oct 24 2017 15:35
Carin Smith

Cape Town - There are certain key benefits to global asset manager BlackRock potentially listing its Greater Europe Investment Trust [LSE:BRGE] on the JSE, according to the company.

BlackRock wants to list the fund on the JSE via a fast-track listings mechanism. The listing is planned for the end of November, subject to generating a minimum level of demand.

It will be offered to qualifying investors through a private placement. The initial amount aimed at being raised is about R650m, but may be more.

Directors have been authorised to allot up to 10.2 million shares in the trust.

PSG Capital is acting as corporate adviser and sole bookrunner for the trust in South Africa.

The trust's primary listing is on the London Stock Exchange, where it it has been listed since 2004. It has a market capitalisation of £313m (about R5.5bn). 

Selling it

According to BlackRock, one of the main benefits of the trust is that it is an actively managed fund focused on the best growth companies listed on European markets. It is not an ETF (exchange trated fund) that tracks an index. It has a concentrated portfolio of between 30 to 60 stocks.

The asset manager hopes to sell the trust to SA investors as a means to benefit from an economic recovery in Europe.

The company explained that Europe has gone through a difficult economic period for the last number of years, due to debt burdens and consumers being under pressure.

This was a similar situation to the US, but the US started its recovery earlier, while Europe is starting now. This means the European economy will benefit as well as the listed companies in the region. 

Another benefit is that SA investors would not have to take any money outside of the country to get offshore exposure. They would be able to invest directly on the JSE in rand.

Approvals from the SA Reserve Bank (SARB) and the SA Revenue Service (SARS) to take money offshore would, therefore, not be needed.

According to BlackRock, the aim of the trust is to provide capital growth, primarily through investment in a focused portfolio. The portfolio is constructed from a combination of the securities of large, mid and small European companies, together with some investments in the developing markets of Europe - for instance Russia and Ukraine.

The trust's strategy is to identify companies with strong management teams, high growth prospects and that have high barriers to entry in their chosen markets.  

Barbara Vintcent, head of BlackRock SA, said in a statement that the European equity markets provide the scope to invest in a range of market leading and globally competitive companies on attractive ratings.

BlackRock has been building a business in SA since 2012, marketing its funds to institutional communities. Through its JSE listing it is looking to raise its profile and bring investment opportunities to the local market.

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