An investment company that will pay part of its net asset value to a cancer charity each year is preparing to list in London.
The Battle Against Cancer Investment Trust (BACIT) has been set up by Tom Henderson, formerly of Cazenove and Moore Capital, and boasts a board that is chaired by Jeremy Tigue, the manager of the Foreign & Colonial investment trust, and contains investment veterans such as Jon Moulton, the founder of Alchemy Partners.
BACIT will invest in funds in multiple asset classes, such as equities, hedge funds, private equity and property. It will target an annualised return per share of 10 to 15 per cent on the offer price of the shares. An initial dividend of 2 per cent of NAV could contribute to that target.
The company intends to donate 0.5 per cent of NAV each year to the Institute of Cancer Research and 0.5 per cent to the BACIT Foundation, which will grant the funds to other charities that are chosen by investors in the company.
Henderson, whose father was the former chairman of the ICR, comments: ‘For many years I have wanted to find a way to combine my background in fund management with supporting the incredible work of the ICR. I believe this investment company will deliver superior investment returns and, I hope, also take a small step towards the ICR’s vision of defeating cancer.’
To keep costs down, all investments made by the company will either not have a management or performance fee or reimburse those fees. In addition, the management team will provide their services to BACIT free of charge. Henderson is said to be personally funding the investment company and is paying for at least one person on the payroll. He is also said to be putting $25 million of his own money into the initial public offering.
The minimum investment amount in the initial offer is £1,000, and it is open to all UK residents. The deadline for applying for shares in the offer period is 19 October.
The investment company is hoping to raise £250 million through its London Stock Exchange placing. Assuming that amount is raised, the total expense ratio is expected to be between 0.2 and 0.3 per cent of NAV.
Stephen Peters, an investment trust analyst at Charles Stanley, says the company will be investing in 30 or so funds, such as M&G Infrastructure and Polar Capital Japan. 'BACIT has persuaded some of its contemporaries in the hedge fund and long-only space to give it some capacity in their funds for no fee. In return they get some godo publicity.'
Although Peters says the company will be appealing to investors that are charity-minded and it's good that there is no performance fee on the underlying funds or with BACIT, he highlights a few concerns.
'The key question is with the management. Arabella Cecil, the CIO, has some experience in selecting funds, but Tom does not. So I wonder how successful their fund selection will be. And will they get on working together? Also the target of 10-15 per cent annual returns seems rather punchy to me.'
Martin Bamford, managing director of financial planning firm Informed Choice, says the company is ‘a really interesting concept and has clearly been created with the best of intentions’.
However, he warns that by only investing in funds that have no fees or rebate their fees, ‘the pool of possible investments will be limited and could result in investors being exposed to funds which are below average’.
He adds: ‘Rather than investing like this, investors who have a desire to make donations to charity should instead create their own properly tailored portfolios and then consider donating a percentage of the profit to their own preferred charities.’