Firetrail Absolute Return Limited has withdrawn its listed investment company IPO offer which was scheduled to close on Friday.
Investor Daily previously reported that the former managers of Macquarie’s High Conviction Fund were launching Firetrail onto the ASX with an aim to raise more than $305 million.
The company has now reported that it exceeded its minimum investment amount of $73.5 million but has made the decision to withdraw regardless.
Firetrail’s managing director Patrick Hodgens said that despite the interest and exceeding the minimum investment, their analysis indicated there was a risk with the small number of investors.
“Whilst Firetrail and the company were pleased to have exceeded the minimum investment amount early in the offer period and have demonstrated strong out performance in these volatile markets, our analysis indicated there was significant concentration risk in a small number of investors who would have owned a large proportion of the company,” he said.
Mr Hodgens said that listed investment companies needed a well-diversified shareholder base. Without that, the company would be open to higher risk.
“Our view is that the increased volatility in equity markets over the past week combined with a number of large LIC raisings this year have had an impact on the broader LIC market. As a result, we do not believe there will be enough demand in the final week of the raise to appropriately diversify the shareholder base for the company” he said.
Mr Hodgens said that the share market had fallen over four percent since the 8 October while the Firetrail return fund had delivered a return of 1.3 per cent in the same time.
“Investors that want access to this alternative investment strategy can still invest via the Firetrail Absolute Return Fund (Fund) which is open to new investors,” Mr Hodgens said.
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