A new investment fund, the Kapstream Investment Trust (ASX: KIT), is looking to raise $300 million in new capital and list on the ASX by the end of March.
The Trust will take the money raised and invest it in its investment manager's other funds, the Kapstream Absolute Return Income Fund, the Kapstream Absolute Return Income Plus Fund, and the Kapstream Private Investment Fund.
Those funds, in turn, invest predominantly in fixed income securities and securitised warehouse financing.
Image source: Getty Images
Monthly dividend stream targeted
The goal, the Trust's offer document says, is to target a return of the official cash rate set by the Reserve Bank of Australia, plus 3.5%, with monthly dividends envisaged.
The offer document goes on to say:
The units seek to provide investors with a means of diversifying their own portfolios and generating regular income. We expect the units will have lower correlation to domestic and international listed equity markets and are expected to have greater correlation to bond and credit markets.
The offer opened on February 16 and is scheduled to close on March 4, with a minimum raise of $200 million and a maximum of $300 million. The shares are to be offered via brokers only.
The offer document says further regarding the investment philosophy:
The investment strategy of the trust is to invest predominantly in a diversified portfolio of investment grade Australian and global fixed income securities as well as asset backed securities typically in the form of warehouse financing . The trust may also hold cash on a temporary or limited basis. The trust may over time also acquire a portfolio of direct assets that fall within the investment strategy and may, subject to applicable law and the ASX Listing Rules, also invest in other funds managed by Kapstream that provide exposure to assets that fall within the investment strategy.
The offer document also explained the details of warehouse financing.
Warehouse financing is a form of private debt securitisation which provides capital to lenders to 'on‑lend' and is a critical part of lending businesses, commonly in the nonbank sector. Underlying borrowers are widely diversified across mortgage, auto, personal, professional, and other receivable and loan types.
The managers of the trust will be paid a management fee but not a performance fee, the offer document says.
The shares in the trust are expected to start trading on the ASX on March 30 under the ticker KIT.
