Case Studies
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The Monks Investment Trust – £100m arrangement of long-term institutional finance

The Monks Investment Trust was founded in 1929 and has been managed by Baillie Gifford since 1931. Baillie Gifford is an unlimited liability partnership founded in 1908 and is solely focused on investment management. It is one of the largest investment Trust Managers in the UK. As at 30th June 2020, Monks’ assets totalled £2,452m with net gearing of 6%.

The amount raised was £100m split into two tranches: £60m with a 34-year maturity and a coupon of 1.86% and £40m with a 25-year maturity and a coupon of 1.77%, on an unsecured basis. The proceeds of the borrowing will be applied for capital investments and general corporate purposes. The Monks’ Board remains committed to the strategic use of borrowings in order to enhance returns to shareholders over the long term and has set a guideline gearing level of 10%. This new £100m financing will be available to bring Monks’ level of gearing into line with this target level.

Centrus supported Monks in the preparation and marketing of the financing such as liaising with multiple investors and other stakeholders as well as carefully monitoring market conditions. Monks’ original intention was to raise an amount of £60-80m. However, following online meetings with a selected group of investors, aggregate demand exceeded £500m. This level of interest prompted Monks to increase the size of the financing to £100m and to select two investors offering the best combination or price and maturity.

James Ferguson, Chairman - The Monks Investment Trust I am delighted that Monks has been able to raise private placement debt at highly attractive long-term rates. This is reflective of an established investment approach and the attractiveness of Monks' proposition. The Board is confident that the investment of these proceeds will enhance the long-term returns for our shareholders.
Robert St John, Managing Director - Centrus Monks has one of the strongest balance sheets among UK listed investment trusts and attracted good interest from a range of institutional investors. Having kept a careful watch on market conditions, Monks moved rapidly to take advantage of improving investor demand and decided to approach selected investors in early July, pricing the transaction later that month. We are very pleased to have played a part in the success of the financing.