EFM launches trust for Asian investment: New Tiger will concentrate on smaller companies across emerging continent

Click to follow
The Independent Online
EDINBURGH Fund Managers is seeking to capitalise on the success of EFM Dragon by launching a new investment trust to invest in smaller companies in emerging Asian countries.

Edinburgh hopes to raise about pounds 50m through a placing and open offer by Panmure Gordon, the brokers. Edinburgh New Tiger Trust is principally aimed at institutional investors.

The pounds 350m EFM Dragon was the top performing investment trust in its sector over the past five years, with net asset value having risen more than 340 per cent. Edinburgh expects Asian economies will continue to grow strongly.

Although EFM Dragon invests about 70 per cent of its money in larger companies, Mike Balfour, Edinburgh's overseas investment director, said much of its performance had come from smaller company exposure.

Edinburgh New Tiger intends to stick to companies with a market value of less than dollars 500m ( pounds 336m). It will invest in the Hong Kong and Singapore markets only as a way of acquiring exposure to some of the smaller economies, such as Laos and Vietnam.

'It does not really overlap with EFM Dragon,' Mr Balfour said. Shares in EFM Dragon still trade at a small discount to its net asset value.

Mr Balfour said that although more institutions were making their own investments in the Far East, they tended to focus on the largest companies in the region rather than 'digging out small companies in Malaysia, Thailand and the like'.

He added: 'We have been out pre-marketing, and a lot of people have said, 'This is interesting'. We would not be doing it if there was not a market for this type of fund.'

Mr Balfour said New Tiger would take a longer-term 'stock-picking' approach than EFM Dragon, whose decisions are often driven by asset allocation considerations. The fund will be managed by William Mackay, one of Edinburgh's six Pacific investment managers.

New Tiger's initial portfolio will have 20 per cent in Malaysia, 20 per cent in Thailand, 17 per cent in Indonesia, 13 per cent in India, 12 per cent in South Korea, 8 per cent in China (through Hong Kong), 5 per cent in the Philippines, 4 per cent in Pakistan and 1 per cent elsewhere.

Investors will receive one free warrant for every five shares. The shares will be issued at 50p.

The minimum investment is pounds 1,000. The offer period is expected to run from 29 January until 18 February, with the first share dealings on 24 February. Edinburgh manages a total of about pounds 3.4bn, with more than pounds 600m in Asian markets outside Japan.

Spice from India, page 33