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India Capital Growth Offers Redemption Opportunity to Shareholders

Strategic Insights

— 2 min read

India Capital Growth (IGC), a £152 million mid-cap fund, has announced a redemption opportunity for its shareholders to sell their shares at a 3% discount to net asset value (NAV) at its third two-yearly redemption point on November 28. This offer is less than half the current discount of 7% and is part of the company's active policy to maintain a tight discount. The fund, which is the top performer in its sector over three and five years, has faced macroeconomic pressures and has trailed the market, with its net assets falling 4.8% over the past year. However, its longer-term performance remains strong, with a total underlying return on net assets of 64.9% over three years and 169.2% over five years.

Key Takeaways:

  • IGC's redemption offer allows shareholders to sell their shares at a 3% discount to NAV, which is less than half the current discount of 7%.
  • The redemption facility is part of the company's active policy to maintain a tight discount and ensure the shares do not drift too far from NAV.
  • Despite the offer, shareholders are not being encouraged to exit, and the company is buying back 1.6 million shares.
  • Over 12 months, IGC's net assets have fallen 4.8%, but its longer-term performance remains strong, with a total underlying return on net assets of 64.9% over three years and 169.2% over five years.
  • The shares have outperformed its rivals, including Abrdn New India, Ashoka India Equity, and JPMorgan Indian, returning 77.9% and 219% over three and five years, respectively.
  • Private investors hold nearly 40% of IGC's shares, making it a popular choice with customers of Hargreaves Lansdown, Interactive Investor, and AJ Bell.
  • Redemptions will only be available for shares held since August 29, 2023.

Statistics:

  • £152 million: The size of IGC's mid-cap fund.
  • 3%: The discount at which shareholders can sell their shares at the third two-yearly redemption point.
  • 7%: The current discount on IGC shares.
  • 64.9%: IGC's total underlying return on net assets over three years.
  • 169.2%: IGC's total underlying return on net assets over five years.
  • 77.9%: The return on IGC shares over three years.
  • 219%: The return on IGC shares over five years.
  • 4.8%: The decline in IGC's net assets over the past 12 months.
  • 40%: The proportion of IGC shares held by private investors.

Sources:

  • Association of Investment Companies press release
  • Bloomberg data
  • QuotedData's James Carthew comments

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