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BB Healthcare leaps over rivals with £64m share issue

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BB Healthcare leaps over rivals with £64m share issue

Biotech newbie BB Healthcare (BBH) is no longer the baby of its sector having raised £64.1 million in its second share issue since floating last November.

The investment trust will issue 57.224 million shares at 112.1p per share, a 1.5% premium to net asset value, after a fund raising run by broker Peel Hunt.

Most of the shares (47.871 million) will be placed with existing investors with 6.117 million issued to new subscribers and 3.234 million bought by private investors through execution-only stock brokers.

After costs the capital raising leaves the Bellevue Asset Management run fund with £63.2 million and boosts its market value to around £287 million.

That pushes it to fourth place in the six-strong specialist Biotechnology & Healthcare sector, leap-frogging International Biotechnology (IBT) and Polar Capital Global Healthcare (PCGH) which have market values of £228 million and £250 million respectively.

The biggest fund in the sector is Worldwide Healthcare (WWH) run by Sam Isaly and Sven Borho at OrbiMed Advisors, which has a market capitalisation of £1.17 billion.

Syncona (SYNC), another new entrant which emerged from the union of the Battle Against Cancer investment trust with the investment arm of Wellcome Trust in December, is snapping at its heels however. Its shares have surged 29% this year, giving it a market value of £1.13 billion.

New York and San Francisco-based OrbiMed does have more assets in the sector though, as it also runs the £457 million Biotech Growth Trust (BIOG), which is the sector’s best performer over 10 years with a stunning total shareholder return of 625%.

Looking beyond the confines of the Association of Investment Companies biotechnology sector, the biggest and best performing closed-end fund in the space is BB Biotech (BION). Also managed by Bellevue, this Swiss-listed fund has a secondary listing in London and towers over rivals with a £2.68 billion market cap. Over 10 years its manager Daniel Koller has generated an even more impressive total shareholder return in sterling of 711%.

BB Healthcare, which Koller runs with Paul Major, has got off to a decent start with its shares up 11% this year. The stock stands on a 3% premium and yields just over 3%, with two dividends a year paid from capital.

You can watch Paul Major talk about the perils of looking for income stocks in the healthcare sector in this video interview.

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