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Rensburg, Barings and Insight back esoteric aircraft fund for income
by Sarah Miloudi on Jan 14, 2011 at 11:25
Baillie Gifford, Baring Asset Management, Insight Investments and Rensburg are backing an esoteric plane fund that has bought and leased a single double-decker aircraft.
Closed-ended fund Doric Nimrod Air One (DNA) raised around £46 million at its mid-December IPO and since, a series of big name backers have piled in.
Baillie Gifford has snapped up 16.8% of the investment company –a £7.15 million position that sits in its Monks Investment Trust – while Insight’s Mike Pinggera bought in to beef up his Diversified Target Return fund’s exposure to infrastructure.
Baring has ploughed in £2.29 million, acquiring a little more than two million shares at the trust’s opening share price of £1. While the bulk of the trust’s backers are large investment managers or institutional players, private wealth manager Rensburg Sheppards, which is headed up by Steve Elliott, is understood to have taken a position as well.
Enthusiasm for the vehicle, thought to be the first UK-listed investment company of its kind, comes on the back of a surge in demand for infrastructure as an asset class and the steady stream of income it provides.
‘In this environment, everyone is looking for investments with a high yield and the possibility of good capital growth,’ Marc Gordon, a partner at the trust’s founder Nimrod Capital, said.
‘Although it seems an unusual venture, this sort of thing has been done in Europe on a number of occasions and has always been quite successful.’
Gordon acknowledges the DNA investment trust sounds more than a little unusual at first glance but stresses its structure is similar to an everyday property transaction that involves the purchase and rental of a commercial or residential site.
Nimrod Capital, which created the fund alongside specialist German aircraft financer Doric Asset Finance, has bought a single asset – in this case a $180 million (£113 million) A380 – which it believes will hold its value and harbours the potential for capital growth. DNA then generates income for investors by leasing, or renting, the aircraft to Emirates Airlines.
Investors who bought in at the trust’s launch will have seen its share price grow by some 10%, and those who hold the investment for 12 years are expected to profit from the eventual sale of the single plane that populates the fund.
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