The initial public offering (IPO) of the Buffettology Smaller Companies Investment Trust has been pulled (26 Oct), despite a ‘broad level of support from a significant number of investors’, after it failed to raise the £100 million minimum needed for a stock market float.

This follows on from Tellworth British Recovery & Growth Trust, which shelved its IPO (7 Oct) after the launch failed to generate enough interest.

Yet a third new launch, the Schroder British Opportunities Trust, appears to be forging full steam ahead.

As a Schroders spokesperson insisted to Shares: ‘Schroders remains committed to launching the Schroder British Opportunities Trust (SBO) and supporting the future growth of British business, both public and private to seize a once in a generation valuation opportunity.

‘Work on the launch of SBO continues to progress well and we look forward to updating the market in due course.’

The asset manager had been looking to raise up to £250 million.

While the Tellworth trust’s failure to launch rang alarm bells, Buffettology Smaller’s cancelled IPO arguably came as an even bigger surprise. Strong demand had been expected given the track record of manager Sanford DeLand’s CFP SDL UK Buffettology (BF0LDZ3) and Free Spirit (BYYQC27) funds.

Buffettology fund manager Keith Ashworth-Lord, CIO at Sanford DeLand, told Shares: ‘We stressed in presentations to potential clients, that there exists a window of opportunity in UK small companies which will not stay open for long.

‘That together with the investment methodology and the long-term nature of our approach, we thought had been very well received.

‘The substantial interest generated early on in the marketing failed to translate into sufficient firm orders on the book in the final week. I put it down to the second phase of lockdown, which substantially turned-up the risk-off dial in investors’ brains,’ said the Warren Buffett devotee.

Ashworth-Lord continued: ‘One of the key attributes of our long-term investment process is that it is agnostic to short-term external and macro factors that cannot be predicted or influenced.

‘As a result, a number of opportunities we had identified offered particularly good value and even more so than at the start of the year when the investment trust was first envisaged. If Buffett has taught us anything, it’s to be greedy when others are fearful.’

Ashworth-Lord said the work done in preparation has been shelved but explained that if sentiment improved  it might look to relaunch assuming valuations remained attractive.

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