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Schroders scrapes £75m for British Opportunities

Biotech trusts top performance charts in February

Schroders scrapes £75m for British Opportunities Trust as UK smaller companies launches fail to entice
Firm ‘faces headwinds’

David Brenchley, Investment Week, 27 November 2020

Schroders said it had scraped together £75m for its British Opportunities Trust (SBO), which aims to take stakes in firms from the more mature end of the smaller companies universe in both public and private markets.

The company, led by head of equities Rory Bateman and head of UK and European private equity Tim Creed, reiterated its belief that “there is a once in a generation opportunity to invest equity capital into high-quality, high-growth UK companies in the £50m to £2bn equity value range with sustainable business models at attractive valuations”…

But the total falls well short of the £250m the asset manager initially targeted, and follows on from the failed launches of Tellworth British Recovery & Growth and Sanford DeLand’s UK Buffetology Smaller Companies Trust…

Emma Wall, head of investment research at Hargreaves Lansdown, said that investors failed to get behind the three launches speaks to that pessimism on UK equities…

The median discount on the 24 UK small-cap trusts currently stands at 10.6%, with the well-established private equity offerings trading even wider than that, noted head of investment company research at QuotedData James Carthew. “This is why all these launches struggled,” he suggested.

“Initial enthusiasm might keep SBO trading at a premium, but only BlackRock Throgmorton is in that position now and it has earned it through a long run of decent performance. It has actually been supporting high growth UK companies with much needed capital, too, helped by being eight times SBO’s size.

“If SBO drifts out to a discount, it has promised to buy in shares to ensure that this doesn’t get wider than 5% – shrinking the company further.”

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