Acorn $100m IPO on track

The initial public offering for microcap fund Acorn Capital Investment (ACQ), which is seeking to raise up to $100 million from retail investors, is on track ahead of the closing date for subscriptions this Friday.

Acorn Capital is understood to have already passed its $50 million minimum subscription target for the fund, with strong interest from small retail investors, financial planners and family offices.

The minimum investment for the general offer is 2,000 shares at $1 each, with options issued on a one-for-one basis with shares under the offer. The options are exercisable 18 months from the their date of issue.

The Acorn listed investment company, which is due to begin trading on the ASX on April 30, will be the only specialist microcap companies fund on the market – focusing on companies outside of the top 250.

Based on market values at the end of January, this means that the largest company in Acorn Capital’s basket will be worth less than $445 million.

At the moment the Acorn microcap fund has around 70 stocks across a diverse range of sectors, with its investment mandate to hold between 60 and 80 companies. Most of these are listed companies, however the fund also has a small percentage of holdings in unlisted microcaps – companies which Acorn says have an “Australian nexus” with long-term capital growth opportunities.

“The aim of the company’s investment strategy is to create a portfolio of listed and unlisted securities whilst retaining many of the risk management benefits of portfolio diversification,” says Acorn Capital chairman John Stevens.

“The company’s investment portfolio is likely to exhibit volatility but it should be noted that, for a well-diversified investor, the analogous investment strategy that the manager has run since 2009, is estimated to have a level of risk (as measured by beta) that, for a well-diversified investor, is comparable to an investment in the All Ordinaries Accumulation Index over the same period.”