Key benefits of BlackRock fund listing on JSE

Cape Town - There are certain key benefits to global asset manager BlackRock potentially listing its Greater Europe Investment Trust [LSE:BRGE] on the JSE, according to the company.

BlackRock wants to list the fund on the JSE via a fast-track listings mechanism. The listing is planned for the end of November, subject to generating a minimum level of demand.

It will be offered to qualifying investors through a private placement. The initial amount aimed at being raised is about R650m, but may be more.

Directors have been authorised to allot up to 10.2 million shares in the trust.

PSG Capital is acting as corporate adviser and sole bookrunner for the trust in South Africa.

The trust's primary listing is on the London Stock Exchange, where it it has been listed since 2004. It has a market capitalisation of £313m (about R5.5bn). 

Selling it

According to BlackRock, one of the main benefits of the trust is that it is an actively managed fund focused on the best growth companies listed on European markets. It is not an ETF (exchange trated fund) that tracks an index. It has a concentrated portfolio of between 30 to 60 stocks.

The asset manager hopes to sell the trust to SA investors as a means to benefit from an economic recovery in Europe.

The company explained that Europe has gone through a difficult economic period for the last number of years, due to debt burdens and consumers being under pressure.

This was a similar situation to the US, but the US started its recovery earlier, while Europe is starting now. This means the European economy will benefit as well as the listed companies in the region. 

Another benefit is that SA investors would not have to take any money outside of the country to get offshore exposure. They would be able to invest directly on the JSE in rand.

Approvals from the SA Reserve Bank (SARB) and the SA Revenue Service (SARS) to take money offshore would, therefore, not be needed.

According to BlackRock, the aim of the trust is to provide capital growth, primarily through investment in a focused portfolio. The portfolio is constructed from a combination of the securities of large, mid and small European companies, together with some investments in the developing markets of Europe - for instance Russia and Ukraine.

The trust's strategy is to identify companies with strong management teams, high growth prospects and that have high barriers to entry in their chosen markets.  

Barbara Vintcent, head of BlackRock SA, said in a statement that the European equity markets provide the scope to invest in a range of market leading and globally competitive companies on attractive ratings.

BlackRock has been building a business in SA since 2012, marketing its funds to institutional communities. Through its JSE listing it is looking to raise its profile and bring investment opportunities to the local market.

SUBSCRIBE FOR FREE UPDATE: Get Fin24's top morning business news and opinions in your inbox.

Read Fin24's top stories trending on Twitter:

Brent Crude
All Share
Top 40
Financial 15
Industrial 25
Resource 10
All JSE data delayed by at least 15 minutes morningstar logo
Company Snapshot
Voting Booth
Do you think it was a good idea for the government to approach the IMF for a $4.3 billion loan to fight Covid-19?
Please select an option Oops! Something went wrong, please try again later.
Yes. We need the money.
11% - 1306 votes
It depends on how the funds are used.
73% - 8640 votes
No. We should have gotten the loan elsewhere.
16% - 1904 votes