Achilles Investment Company is set to start trading on the London Stock Exchange tomorrow after raising £54m to make an activist push against struggling investment trusts.
The trust, run by City veterans Christopher Mills and Robert Naylor at Harwood Capital, would be the first investment trust float on UK markets since 2023.
Naylor and Mills are best known for orchestrating the sale of Hipgnosis to Blackstone last year at a 60 per cent premium to the struggling trust’s stock price.
The duo also worked together to topple the chair of PRS REIT, while Naylor was chair of Round Hill Music Trust when it received a takeover offer.
Achilles will target a “concentrated portfolio” of investment trusts, with a focus on alternative assets like infrastructure or property.
Achilles will then seek to boost the trusts’ share prices “through constructive activism” by identifying undervalued or underperforming assets and unlocking their value.
After no investment trusts debuted on UK markets last year, analysts are hopeful the trust might be able to breathe new life into the sector.
The one planned trust IPO in 2024, Special Opportunities REIT, pulled its float after failing to meet the £250m minimum fundraising required for the public listing to proceed.
The average trust (excluding giant 3i) currently trades at a 13.7 per cent discount to the value of its underlying assets.
“Wide discounts that have plagued investment companies in the alternative asset classes make just about anybody here a target,” said Richard Williams, senior analyst at Quoteddata.
“Investors are clearly fed up with poor performance and inaction from boards and are now backing Harwood to repeat its successful activist ventures at Hipgnosis, Round Hill, and PRS REIT.”
Winterflood analyst Shavar Halberstadt agreed, describing the current market as “prime time for activist investors”.
Analysts noted that property trusts have been the target of frequent M&A activity in recent years, so it was likely Achilles would look to the sector first.
“It may be a force for good, and we will see some sleepy boards forced to take action, but there may be some undeserving casualties along the way – especially if wholesale portfolio sales are made at the bottom of the market,” added Williams.
The launch comes amid US hedge fund Saba Capital’s second activist push against a variety of UK investment trusts, hoping to convert them to open-ended funds.
Saba’s previous attempts over the last month to remove the boards of seven UK investment trusts were thwarted by shareholders, with less than one per cent of independent shareholders voting for its proposals.
“Unlike the New York hedge fund strategy, the Achilles proposition would be driven by individuals with deep roots in the sector and previous success in achieving realisations,” noted Halberstadt.