Contango Asset Management has cancelled its Midcap Income Fund initial public offering (IPO) due to investors continuing to show caution.
Contango’s managing director, David Stevens, said the firm recognised the product has been brought to market prematurely.
“The major central banks have been encouraging investors to move out along the risk spectrum,” Mr Stevens said. “As this process gathers momentum, investors will be attracted to a broader range of high yield equities beyond the major banks and Telstra.
“The Contango MidCap Income Fund is well placed to meet this need. We remain confident that midcap equities will prove to be an attractive source of income for investors and are leaving open the possibility of relaunching the IPO at a later date.
Funds that have already been subscribed will be returned to investors.
On December 3, Contango announced the extension of its float closing date to Monday 17 December following requests from advisers for additional time to liaise with investors.
“People are investing in the company to obtain clearly defined quarterly income streams of 7.2 per cent per annum plus franking through investing in a diversified portfolio of 30 to 40 high-yielding mid-cap stocks,” Contango MidCap Income Limited’s chairman Ian Ferres said at the time
On November 2, Contango announced listing of its new investment company, Contango MidCap Income Limited in response to adviser demand.
The company planned to provide diversified investment through a portfolio of approximately 30 to 40 stocks, predominantly comprising companies from the Australian Securities Exchange, MidCap and ASX Small Ords indices.
The initial decision to list the new company followed market research of 40 advisers and 10 licensees.
