Fair Oaks Income Fund (Fair), a listed CLO investment vehicle, is arranging a potential share issue of up to $200 million, the firm said.
Investment manager Fair Oaks Capital said that it will arrange up to 200 million C shares at an issue price of $1 following investor demand.
It is expected that the placing of the C shares will close on or around 10 August, after a new prospectus is published early next month.
The fund has primarily invested in the equity of CLOs but also some mezzanine, PDI understands. Proceeds from the share issue will be used for further similar investments in the third quarter.
Analysis from alternative fund tracker Liberum showed that the issue price will be 0.5 percent below the previous day’s close and at a 2.8 percent premium to the net asset value (NAV) per share of 31 May 2015.
The fund has consistently attracted new investors since the initial public offering in 2014, Liberum added, highlighting that the proposed issue would almost double the existing market cap of the company.
At present, Fair trades on a 3.3 percent premium to NAV with an 8.4 percent yield, which is 7 percentage points ahead of London-listed peers. This differential is expected to narrow as the new C share issue may reduce some of the demand for the existing ordinary shares, Liberum said.
Current investors in the fund include Coller Investment Management, 7 investment management, Skandia LIV, AXA, Merseyside Pension Fund and Capita Financial Managers IR, according to Bloomberg.
Fair Oaks is a credit advisory investment firm which was launched by the co-founding partners of Stone Tower Capital, later bought by Apollo Global Management, and senior investment professionals of Blackstone credit subsidiary GSO Capital. The firm has offices in London and New York and manages around $600 million in assets under management.