Fidante: Listed Alts Cap Raising Drives Growth

March, 2017

Fidante Capital (formerly Dexion Capital), the international capital markets business of Fidante Partners, has found that capital raising by existing listed alternative investment companies has been the dominating driver of sector growth.

-          £537m has been raised by existing companies during Q1’17-to-date (to 10 March 2017)

-          This is the tenth successive quarter that more than £500m has been raised (starting back in Q4 2014)

-          This is also the seventh successive quarter than follow-on capital raising has exceeded IPO capital. Nevertheless, Q1 has also seen three IPOs, raising a cumulative £316m of capital so far.

Tom Skinner, Head of Research and Manager Selection at Fidante Partners, has run some analysis looking at the growth of the 2011-2015 vintage of alternative investment companies IPO over the years since (to 31 December 2016). He found that the growth has been impressive and relatively universal. Of the 47 companies that IPOed 2011-2014, only seven have not raised additional equity, and 19 have raised at least their IPO amount again. Including the 2015 vintage (an additional 20 companies), only 14 have not raised additional equity.

Four companies have now raised total equity exceeding five times the IPO amount: Target Healthcare (£46m IPO and £259m total raised), NextEnergy Solar* (£86m; £468m), Tritax Big Box (£200m; £1.26bn) and Empiric Student Property (£85m; £522m). Equally impressive are those companies with a repeated and sustained ability to raise comparable amounts of capital each year. This group comprises many of the renewable energy investment companies, as well as specialist property REITs.

The beauty of the investment company sector, however, is that it can accommodate a multitude of strategies and capital requirements. Some strategies or ideas are naturally capacity or time constrained. Moreover, continuous growth may not always be in initial IPO investors’ best interests if an opportunity set has expired or matured. Nevertheless, these continue to be good times for the listed alternative investment company sector.

Growth of alternative investment companies with IPOs 2011-2015

*Current corporate client of Fidante Capital