SBO to list on London Stock Exchange

Schroders confirmed the trust would invest 50% of its portfolio in public companies and 50% in private firms

Schroders British Opportunities Trust (SBO) will look to list on the London Stock Exchange by 1 December, as the company officially announced its intention to raise £250m on Tuesday.

Schroders confirmed the trust, which will have a seven-year life, would invest 50% of its portfolio in public companies and 50% in private firms, with market capitalisations of between £50m and £2bn.

The trust, which will be managed by head of equities Rory Bateman and head of UK and European private equity Tim Creed, will aim for £250m at launch, with the option of issuing further shares, and/or launching 'C' shares in the 12 months from IPO.

SBO will be chaired by Neil England, currently chair of Augmentum Fintech and formerly chair of BlackRock Emerging Europe.

The launch was initially revealed by Investment Week in September, when it was one of three UK smaller companies trusts looking to launch in the aftermath of the coronavirus crisis.

The other two of those offerings, however, have been pulled by Tellworth and Sanford DeLand in the meantime.

England said the launch was "timely" and the trust had a "differentiated investment strategy", with the chair noting Covid-19 had "created investment opportunities in a number of quality companies with high growth potential".

Additionally, we believe that many UK businesses are currently mispriced, England reasoned.

The excellent track record of both the public and private equity investment teams at Schroders gives us confidence that we can deliver compelling returns for investors, he said.

Bateman said the portfolio would "have very limited overlap with any existing London listed investment trust", with the firm's UK head of intermediary Doug Abbott having previously told Investment Week it would invest in much more mature businesses than its current offering in the space, Schroder UK Public Private Trust.

The current macro environment presents investors with a staggering opportunity with regard to UK public equity valuations, Bateman explained. The company's strategy offers a highly differentiated growth based approach, hand in hand with the support of sustainable development screening metrics.

SBO said it would aim to deliver a net asset value (NAV) total return of 10% per annum once its capital is fully deployed. When the cash is raised, the trust expects the portfolio to predominantly comprise public stocks until it can achieve full deployment across its private targets.

SBO will have a keen eye on ESG factors, looking for companies with sustainable business models in terms of both the longevity and durability of their businesses and their ESG behaviours.

Bateman said SBO would look to "[take] advantage of what we believe is a once in a generation opportunity".

We believe Schroder SBOish Opportunities is a compelling opportunity for investors given the combination of public and private equity, the intense focus on ESG engagement and the circa seven-year fund life, Bateman said.