Perpetual Credit Income Trust - Capital Raising Announcement - 9 July 2024
PCI (PCI) Share Update July 2024 Tuesday 9th
Perpetual Credit Income Trust Announces Capital Raising
Perpetual Credit Income Trust (ASX:PCI) has announced a new capital raising initiative aimed at expanding its investment portfolio and increasing liquidity for its unitholders.
Instant Summary:
- Placement to wholesale investors at $1.10 per unit.
- Unit Purchase Plan (UPP) for eligible unitholders without brokerage costs.
- Proceeds to be used for additional investments in line with the Trust's strategy.
- Expected increase in liquidity and reduced fixed expense base per unit.
Details of the Capital Raising
Perpetual Credit Income Trust (PCI) has announced a capital raising initiative that includes a placement to wholesale investors at an issue price of $1.10 per unit and a Unit Purchase Plan (UPP) for eligible unitholders. The placement aims to raise up to $66.2 million by issuing approximately 60.2 million fully paid ordinary units.
The UPP will allow existing unitholders with a registered address in Australia or New Zealand to apply for up to $30,000 worth of units without incurring brokerage or transaction costs. The UPP units will be offered at the same price as the placement units, $1.10 per unit.
Use of Proceeds
The proceeds from the capital raising will enable PCI's investment manager, Perpetual Investment Management Limited, to pursue additional investments in accordance with the Trust's investment strategy. The Trust focuses on well-diversified floating rate Australian corporate credit, providing protection against prevailing market conditions such as geopolitical headwinds, inflationary pressures, and higher interest rates.
Benefits for Unitholders
The capital raising is expected to increase the size of the Trust, thereby enhancing liquidity for its units traded on the ASX. This increased liquidity is anticipated to benefit existing unitholders and attract new investors, brokers, analysts, and financial advisers. Additionally, the larger scale of the Trust should reduce the fixed expense base per unit, benefiting both new and existing unitholders.
Investment Strategy and Performance
PCI's investment strategy involves holding a diversified pool of credit and fixed income assets, including corporate bonds, floating rate notes, securitised assets, and private debt. The Trust aims to provide monthly income with a target return of the RBA cash rate + 3.25% per annum (net of fees) through the economic cycle.
Portfolio Manager Michael Korber highlighted that PCI has delivered a 10.2% return over the year to 31 May 2024, surpassing its target return. The Trust's focus on quality issuers and diversified investments has positioned it well to capitalize on opportunities in the current market environment.
The capital raising initiative is expected to positively impact PCI's stock by increasing liquidity and reducing the fixed expense base per unit. The additional capital will allow the Trust to pursue new investment opportunities, potentially enhancing its overall performance and attractiveness to investors.
Investor Reaction:
Analysts and investors have generally reacted positively to the announcement, noting the potential benefits of increased liquidity and the Trust's strong performance over the past year. Some investors are particularly optimistic about the Trust's ability to navigate current market conditions and capitalize on new investment opportunities.
Conclusion:
Investors should consider participating in the UPP to take advantage of the opportunity to purchase additional units without incurring brokerage costs. The capital raising initiative is expected to strengthen PCI's position and enhance its ability to deliver consistent returns. Stay informed about the Trust's performance and future announcements to make well-informed investment decisions.