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Jayanta Mallick

Caledonia-backed fund places 75-m shares at 100 pence

Kolkata , Jan. 2

CALEDONIA-BACKED India Capital Growth Fund on the year-end said it has placed 75 million shares at 100 pence to institutional and other investors and started trading on AIM of the London Stock Exchange. This is the first exchange- traded fund on the LSE exclusively directed towards mid-cap Indian stocks.

The company said it would seek to provide long-term capital appreciation by actively investing in companies based in India. Once fully invested, its investments will predominantly be in listed small- to mid-cap Indian companies with a smaller proportion in unlisted Indian companies.

India Capital Growth Fund (ICGF) is a new close-ended investment company registered and incorporated in Guernsey. Polar Capital LLP is acting as fund manager to the company as India Investment Partners (IIP) is yet to receive necessary permission to take over as fund manager from the UK market regulator, Financial Services Authority (FSA).

Caledonia Investments plc, a UK investment trust company, has subscribed for 22 per cent of the ordinary shares of the company and also owns 43 per cent of IIP, with the balance of the shares in IIP being owned by management.

ICGF made placement of ordinary shares with separately traded warrants attached on a one for five basis. Arbuthnot Securities Ltd acts as nominated adviser and broker to the fund.

According to Caledonia, the close-ended structure suited its investment philosophy and the AIM listing will provide liquidity to investors. The structure also includes a tender mechanism for the shares of ICGF that will help manage any traded discount to NAV, should a discount occur.

ICGF would also look for investment opportunity in unlisted mid-cap Indian companies.

"ICGF is intended to hold a core of major investments and to take board seats where appropriate. Initial investment in any one company will not be more than 10 per cent of assets under management and no more than 25 per cent will be invested in unquoted companies.

No investments will be made in start-ups and the expected minimum size of investment will be £2 million", a statement by the company said.

Indian Advisory Partners, a private India registered limited company and provider of corporate finance and investment services, has been retained by Caledonia as its advisor in India since January and has been instrumental in helping Caledonia build up a portfolio of direct India investments.

Further, Caledonia has hired five professionals, based in Mumbai, who will act as a support team.

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