Friends Provident seeks pounds 50m for ethical trust

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FRIENDS Provident, the mutual life insurer that on Monday took over NM Financial, its smaller rival, is seeking pounds 50m for its first investment trust - an ethical fund whose shares will pay a return of 8.1 per cent, writes Paul Durman.

Friends Provident, which already runs ethically-invested unit trusts, will avoid companies that deal with oppressive regimes, damage the environment, exploit animals, or are involved with the arms trade, tobacco, alcohol, pornography or gambling. Peter Silvester, general manager for investments, believes more than 400 UK-quoted companies meet its criteria.

Friends Provident Ethical Investment Trust will be a split capital trust with an eight-year life. Geared ordinary shares, offered at 100p, are expected to pay a gross annual yield of 8.1 per cent. Zero dividend shares, offered at 103p, will rise in value by a pre-determined rate of 8.1 per cent, and should repay 192p by the end of 2001.

Greig Middleton, the stockbroker to the trust, has already found institutional buyers for pounds 15m of shares.