A UK-focused investment trust inspired by the investing philosophy of star US fund manager Warren Buffet has pulled its initial public offering due to a lack of investor interest.
UK Buffettology Smaller Companies Trust, which had announced its intention to float on the London market only a month ago, today said it had failed to meet sufficient demand to raise the £100million minimum required.
It comes after Tellworth British Recovery and Growth trust, another recently launched investment company targeting cheap British shares that could benefit from an economic revival, pulled its float less than three weeks ago.
Retreat: UK Buffettology Smaller Companies Trust, inspired by the investing philosophy of star US fund manager Warren Buffet, won’t float on the London stock market
Laith Khalaf, financial analyst at investment platform AJ Bell, said: ‘The Buffett name and the excellent performance record of Sanford DeLand simply hasn’t put enough bums on seats to get its UK smaller companies launch off the ground.
‘Sentiment towards the UK market is at a low ebb and a resurgence of virus cases has further undermined confidence.’
The UK Buffettology Smaller Companies investment trust is part of the top-performing £1.3billion UK Buffettology fund, managed by Keith Ashworth-Lord of Sanford DeLand.
It aimed to take advantage of the coronavirus stock market crash which saw shares plummet, betting on ‘unloved’ small and micro-cap British companies.
Khalaf said: ‘Smaller companies tend to beat their big blue chip rivals over the long term, but it’s understandable investors see them as being at the sharp end of any impending economic trauma.
‘The Buffettology focus on quality companies should have provided some downside protection on that front, but that’s academic now.’
This latest U-turn leaves investors to wonder if Schroder British Opportunities trust, another trust which had also announced plans to float earlier this month, will also backtrack.
‘With Tellworth and Buffettology IPOs now scuppered, it’s two down and one to go,’ Khalaf added.
‘Schroders has the benefit of a bigger distribution network than the boutique operators Tellworth and Sanford DeLand, but it looks like it’s facing an uphill battle to pull money in, and the failure of a second IPO will no doubt give Schroders pause for thought.’
Schroders aims to raise £250million via its initial public offering. It hopes to invest in the ‘future of British business’ in both the public and private space, while supporting UK employment throughout the pandemic and beyond.