New Star Fin Opps proposes new mandate and fund raising

The changes are part of a move to re-focus the trust on growth of income and capital, rather than being a high income vehicle. Today the fund is flat at 34.5p.

Investors will get to vote on this at an EGM (extraordinary general meeting) on 14 September. It is thought the vote is likely to pass as major shareholders have already been consulted on the changes.

The investment company, which had a market cap of £13.3m as of 25 August, is also seeking to increase its size to improve liquidity and cut costs by means of a fund raising. This would involve a significant amount of ordinary equity and could involve other share classes, though this has not yet been decided.

This year investment companies have had to resort to alternative fund raising options due to the difficulty and expense of getting bank debt, including issuing zero dividend preference shares and convertible bonds. In addition New Star Financial Opportunities aims to lower its gearing.

The size of potential issue has also not yet been decided.

In an announcement published on 25 August the investment company said that in light of the significantly changed landscape for financial companies and fund manager Guy de Blonay’s view that pan European markets potentially offer one of the least attractive financials markets for investment over the medium-term, it proposes investing on a global basis. At present, only 25 per cent of its assets can be invested outside Europe.

One of De Blonay’s open-ended mandates, the New Star Global Financials fund, has a broader spread of investments including an 11.55 per cent allocation to Hong Kong with 11.34 per cent in China. To reflect the new mandate it would also change its benchmark from the Dow Jones STOXX 600 Financials Index which focuses on Europe to the MSCI World Financials Index.

New Star Financial Opportunities chairman Julian Tregoning said: "With the skills of the fund’s new manager it seems a pity not to give him the freedom to invest globally."

De Blonay assumed management of the company from Nick Brind earlier this year after Henderson bought New Star. Tregoning also said the company had already reallocated 15 per cent to 20 per cent of its assets to Asia including Japan, cutting back on its UK and continental Europe allocation.
 
As of 30 June, the company had 51.3 per cent of its assets in the UK, with only between 4-5 per cent in Asia, though the factsheet stated it had increased Asia exposure with holdings in Industrial & Commercial Bank of China and other banks in Singapore.