Kapstream KIT IPO
Kapstream are out there marketing their Investment Trust, targeting 3.5% over swap. Any thoughts on the offer pls... Cheers
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Answer
Hi Matt,
The Cornerstone offer was well bid. They were going for $100m and got $145m before the IPO was officially launched. From what we hear, they are currently around $200m raised having just launched, so we think they’ll get to the targeted $300m, and potentially more. Demand in the IPO is important when thinking about secondary market (ASX) trading.
The LIT will give investors exposure to a diversified mix of investment-grade Australian and global fixed income, private asset-backed securities and credit strategies, with an objective of delivering regular monthly income and a target return of RBA Cash Rate + 3.50% p.a. (net of fees) – putting the net yield at ~7.2%.
Unlike some older listed credit vehicles, KIT includes liquidity features such as limited quarterly redemption buybacks and potential on-market buybacks and will invest across Kapstream’s existing strategies (including absolute return income and private investment funds) to blend public bonds and private credit opportunities.
Kapstream is a good manager, and has proven themselves over a long period of time. We like the offer overall, the only aspect we’re not as keen on is the fee structure, which is on the high side for this type of product at 1.39%.
