TwentyFour Select Monthly Income Fund Limited
(a non-cellular company limited by shares incorporated in the Island of Guernsey under the Companies (Guernsey) Law 2008, as amended, with registered number 57985 and registered as a Registered Closed-ended Collective Investment Scheme with the Guernsey Financial Services Commission)
Market update and placing of tender shares
Market update
The Directors of TwentyFour Select Monthly Income Fund Limited ("SMIF", the Company) and the Portfolio Manager continue to believe there is significant opportunity given prevailing market conditions. In relation to the opportunity, Gary Kirk of the Company's Portfolio Manager, TwentyFour Asset Management LLP, comments:
The actions of the major central banks, particularly in Europe and the UK have, and continue to have, a dramatic effect on the fixed income universe, resulting in yield becoming an ever more scarce commodity. Fixed income investors are now faced with the challenge of sourcing product where the global weighted average yield is now below 1.5% for an average duration of almost 7 years. For investors it is a startling fact that 21% of all fixed income products are now generating a negative yield and this scenario is becoming even more acute as global rates are kept artificially low.
Those funds that are focused on investment grade product are now faced with a real dilemma. Once management fees have been extracted there is very little yield available to attract investors, which has forced the portfolio managers into higher beta and higher yielding assets. This encroachment into the smaller universe of high yield credit will have the obvious effect of driving yields ever tighter as evidenced by the average yield now available in the Euro HY sector of just 3.16%.
SMIFis focused on high conviction, relative value credit products with an element of illiquidity making them unsuitable for inclusion in typical daily mark-to-market funds; hence the closed end structure of SMIF. The rationale for SMIF is to carry out extensive due diligence at the point of investment and then let the bonds generate their returns through timely interest payments and the natural pull to par at redemption date. The Fund was launched in Q2 2014, just prior to the period of market stress as investors grew bearish about the potential for US rate hikes, commodity weakness, negative rates and slowing global growth. Since that period credit spreads have generally recovered but some sectors have still not yet recovered to the levels seen in early 2014. This offers a generous opportunity for investors to participate in the recovery momentum that currently exists. Not only does SMIF generate an attractive yield of circa.7% it also has the mix of assets that offer considerable upside in the small but actively sought after area of available yield.
This is an opportunity in a scarce commodity.
More information on the opportunity will be available on the Company's website: www.selectmonthlyincomefund.com
Placing of Tender Shares
Following the announcement on 2 September 2016, which stated that an aggregate of 25,528,419 ordinary shares had been submitted for Tender, the Board will be seeking to satisfy Tender Requests by placing the Tendered Shares with investors in the secondary market to qualifying investors* through the Company's corporate broker, Numis Securities Limited ("Numis"). The Tender Shares are available to be purchased at a minimum of NAV, at 29 September 2016, less 2 per cent. The Company will then repurchase, subject to the Tender Restrictions, any Tendered Shares that have not been successfully placed in the market.
The placing of the tender shares is expected to close at 12 noon (London time) on 5 October 2016 but may be closed earlier or later at the discretion of the Company and Numis. Numis may, in agreement with the Company, accept bids that are received after the bookbuild has closed.
Subject to the above, Numis may choose to accept bids, either in whole or in part, on the basis of allocations determined in agreement with the Company, and may scale down any bids for this purpose on such basis as the Company and Numis may determine.
Timetable:
| 29 September 2016 | End of month NAV calculation date |
| 12 noon, 5 October 2016 | Bookbuild closes |
| 6 October 2016 | NAV, Tender price and result of placing announced |
| 13 October 2016 | Payment date |
* As defined in section 86(7) of the Financial Services and Markets Act 2000 (as amended).
| For further information, please contact: Numis Securities Limited: Hugh Jonathan +44 (0)20 7260 1000 Nathan Brown TwentyFour Select Monthly Income Fund Limited: John Magrath +44 (0)20 7015 8900 Alistair Wilson |
