Micro-cap fund Acorn slips on debut

Shares in a new retail investment fund launched by veteran micro-cap fund manager Acorn Capital have declined by as much as 6.5% on their first day of trade.

Shares in the new Acorn Capital Investment Fund opened at 95c compared with the $1 per share listing price, before slipping to 93.5c. The fund issued 50.8 million ordinary shares, together with 50.8 million options.

The new Acorn fund is designed to attract retail investors and mirrors an unlisted fund it runs for institutions.

According to the fund’s prospectus, it will invest in listed micro-caps – companies with enterprise valuations of less than about $440 million. It will also venture into unlisted micro-caps after getting established, giving investors access to a difficult sector at lower risk than if they attempted to navigate it themselves. 

The micro-cap sector has been out of favour of late but is starting to show early signs of a renaissance, likely contributing to Acorn’s decision to IPO.

“Many micro-cap companies are growth orientated and have recently been overlooked by investors in favour of investments with high income or dividend characteristics,” Acorn Capital said in the prospectus.  

Melbourne-based Acorn Capital, founded in 1998, has $1.1 billion in funds under management. It is 40% owned by Australian Unity.

It will manage the new fund and charge management and performance fees. Investors in the IPO, run by joint lead managers Baillieu Holst, Bell Potter Securities, Morgans and TC Corporate, will gain access to Acorn’s existing portfolio.