The BlackRock Greater Europe Investment Trust (BRGE), which has been granted a fast-tracked listing on the JSE, will be raising more capital from investors than expected because of rand weakness in the wake of Finance Minister Malusi Gigaba’s recent medium-term budget policy statement.
The prelisting statement released by the subsidiary of the world’s largest asset manager on Friday showed the trust — which has investments in European blue chips Unilever, Volvo, Renault and Bayer — planned to raise about £35.5m (R670m), rather than the R650m BlackRock MD for closed funds Simon White had told Business Day it planned to raise.
"As the primary listing share price is trading in [pounds] and the shares are issued at a [pound net asset value], rand weakness will result in the total quantum being raised in rand increasing," White said on Friday.
The rand has slumped nearly 4% to R18.7694 against the pound since BlackRock’s announcement in October that its megafund would take a secondary listing on the JSE.
The BRGE prelisting statement confirmed it would list all 10,200,311 shares that existing shareholders had given directors the power to allot at its 2016 annual general meeting.
These will be priced at net asset value (NAV) per ordinary share at the close of business on November 17.
Applicants for the shares will be informed if they were successful on November 20.
On Thursday, BRGE’s NAV was 346.74p, a 0.74% decline from the beginning of October.
On October 12, BlackRock released annual results showing it had trailed its benchmark index, with a share price increase of 22.9% and a NAV increase of 23% compared with the benchmark’s 26%.
"It would not be right to communicate a rand price ahead of November 17 or 20," said White.
"But should the rand weaken between now and November 20 and the NAV placement price stays the same, then the rand price will increase." The BRGE has confirmed it will charge investors a management fee of 0.85%, while not charging any performance fees.
"This is more competition for local managers," said Patrice Rassou, head of equities at Sanlam Investments.
Rassou said BlackRock was best known for its passively managed funds, making it unclear if investors would flock to the actively managed BGRE. Of BlackRock’s $5.98-trillion in assets under management, $1.6-trillion are actively managed.