BFS Investments is seeking £25m for a new split-capital investment trust with two classes of share.
The trust will be launched through a placing sponsored by Williams de Broe and will aim for income from investing in UK smaller companies capitalised at less than £100m.
Its two share classes will be zero dividend preference shares and ordinary shares.
Its ordinary shares will have an expected initial gross yield of 10.2 per cent, with dividends paid quarterly, while the zero shares will be issued on a gross redemption yield of 8 per cent, redeeming in 2007.
BFS director Nigel Sidebottom says there is an excellent opportunity for investors seeking income to invest in UK small caps at the moment.
He says: “The big-cap stocks have run away and there are low yields but if you look at the small caps there are very good yields. There are over 200 stocks with yields of more than 6 per cent in our universe. In those 200 companies, there are some good companies.”
He says the split-capital structure was chosen because of its flexibility and suitability to institutional and retail investors.