Tritax has raised £300 million for a new real estate investment trust targeting the European logistics market in the biggest launch of a listed closed-end fund this year.

In what proved to be an oversubscribed placing investors scrambled for shares in Tritax Eurobox (EBOX), which will list on the specialist fund segment of the London Stock Exchange on Monday. The shares will be issued at 100p per share, while the euro equivalent issue price has been fixed at 113.1c per share, based on the sterling/euro exchange rate on 3 July.

Expenses will be capped at 2% of the gross proceeds and are expected to total £6 million. This means net proceeds are likely to amount to £294 million. In this case, the estimated net asset value (NAV) per share would be 98p at launch.

This represents a big success for Tritax, the property investment manager behind the £2.2 billion UK-focused Big Box Reit (BBOX). The £300 million IPO exceeds the £187.5 million that Aberdeen Standard European Logistics Income (ASLI) attracted at flotation last December. 

It also follows a mixed week for other investment company launches. For example, Hipgnosis Songs (SONG), a music royalty fund set up by Merck Mercuriadis, the former boss of Sanctuary record label and manager of Beyonce hit its fundraising target with just over £202 million once additional funds came in this week. It was briefly the year-to-date's biggest investment company launch, beating the previous winner, Baillie Gifford US Growth (USA), which raised £173 million in March.

However, Ashoka India Equity (AIE), a no-charge investment trust fell short of its £200 million target after raising just under £46 million, its efforts hampered by the current sell-off in emerging markets.

Commenting on the IPO, Tritax EuroBox chairman Robert Orr commented: ‘We have a strong, identified pipeline of high quality, large scale logistics assets let to institutional grade tenants and we will now work towards deployment of the net proceeds providing our new shareholders with secure income and an attractive capital return.’

The opportunities

The investment team, headed by Nick Preston, has identified a €1.8 billion (£1.6 billion) pipeline of high quality logistics properties from its contacts in Europe. These will typically be leased to institutional grade tenants and in some cases the income will be underpinned by index-linked rental agreements.

Tritax is currently in advanced negotiations to buy assets that are valued in excess of €600 million.

The team is able to borrow up to 50% of gross assets. However, they will work towards a target of 45% over the medium-term.

Tritax EuroBox will target an initial dividend yield of 4.75% per annum and this will contribute towards a forecasted 9% annual total return over the medium term. Dividends will be paid on a quarterly basis, declared in euros but paid in sterling by default.

The Tritax team will receive an annual management fee of 1.3% on the first €1 billion, falling to 1.15% between €1 billion and €2 billion and 1% thereafter.

Tritax notes that the European logistics property market is in the midst of major long-term structural change, as online retail penetration rates on the continent start to catch up with the UK. This trend is supported by rising consumer confidence and the increased availability of credit.

While the company aims to tap into the growth of e-commerce, the team notes that another important trend is taking place: namely, occupier demand to improve supply chain efficiencies and upgrade logistics facilities. This is driving demand for ‘big box’ facilities.

Jefferies International and Kempen & Co were the joint brokers running the fund raising with Scott Harris UK advising on the offer to intermediaries.