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Candor launches mutual fund with IPO

14 October 2015 04:25 am - 0     - {{hitsCtrl.values.hits}}

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By Chandeepa Wettasinghe
Candor Asset Management (Pvt) Ltd will be listing its latest Candor Opportunities Fund, on the Colombo Stock Exchange (CSE) through an Initial Public Offering (IPO).

The 5-year unit trust fund will be listing 50 million units at Rs.10 each with an option to offer a further 25 million units in case of an oversubscription.
The minimum investment is 100 units, and subscriptions must be made in multiples of 100 units.

The IPO is scheduled to open on October 20 and closes on November 09.

It will pay annual dividends, and liquidate assets and repay the investors on a pro-rata basis at the end of the 5 years after all liable expenses are deducted.
The fund is close-ended, meaning that after the initial public offering, the fund will not be offering new units or allowing redemptions for the units bought, with investors having to trade the units on CSE to enter or exit the fund.

Candor’s parent company, Dubai’s Eagle Proprietary Investment Limited will be investing Rs.100 million at the IPO to show its confidence in the fund and the Sri Lankan equity market.

The fund aims to invest 97 percent of its raised capital in equity, with the remaining 3 percent in fixed income securities. However, it has the option of liquidating equity investments during downturns in the stock exchange.

As at end 2014, there were 63 unit trust funds in Sri Lanka with 32,584 unit trust holders and a total asset value of Rs.126.53 billion. However, only 11 percent of the net value was invested in equities, showing the risk-averse tendencies of Sri Lankans.

“The strategy is primarily to invest in stocks of well-managed companies that are attractively priced with medium to long-term growth, and income potential with the option to move into fixed income securities at times when the equity market is over-valued,” the issue prospectus said.

A front end fee of 1.5 percent will be charged on the initial offer price, while a management fee of 2 percent of the net asset value will be charged by the fund manager per annum.

Deutsche Bank AG who will act as trustee and custodian for the fund will charge a trustee fee of 0.15 percent of the net asset value per annum and Rs.20,000 a month from the whole fund as a custody fee.

Candor Asset Management will act as the registrars to the initial public offering, while Bartleets Religare Securities (Pvt) Limited will act as the lead distributor. Candor already has 4 unit trust funds trading on CSE.
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