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SQN Asset Finance Income Fund To List With London IPO

June 16, 2014

Samuel Agini

LONDON (Alliance News) - SQN Asset Finance Income Fund Ltd Monday said it intends to raise up to GBP150.0 million in an initial public offering on the main market of the London Stock Exchange, with up to GBP100.0 million more to be raised in a placing following admission.

In a statement, SQN Asset Finance, which will invest in equipment lease and asset finance arrangements across a range of assets and industries in the UK and the US, said it will focus on equipment essential to businesses that produces revenue or cost-savings.

Its investment manager, SQN Capital Management LLC, will target transaction sizes below GBP20.0 million, but expects the average size of its deals to be between GBP3.0 million and GBP6.0 million, with typical initial lease terms in the range of three to 10 years, depending on the asset. Investments will be made predominantly in the UK, the US and Europe, which are expected to represent at least 75% of the company's portfolio, while investments can also be made in Canada and Australia, amongst other countries.

Citing a 2014 White Clarke Global Leasing Report based on data from 2012, SQN said the global leasing market is worth USD868 billion and is growing with particular strength in the UK, with nearly 24% of all capital equipment acquisitions financed through equipment leases. The fund added that lease and asset financing provides regular, predictable cash flows, which provide income for dividends.

Its initial portfolio is expected to be equal to at least three-quarters of the proceeds of net issue, with a maximum size of GBP82.5 million. SQN Capital Management LLC expects the proceeds to be "substantially" invested within three to six months of admission. The fund will target an initial dividend of 7.25 pence a year, which it expects to grow over time, and a total net return to investors of 8-10% a year. It expects to pay monthly dividends from January 2015, following two quarterly dividends.

"Equipment leasing as an investment strategy provides investors with a unique opportunity to make investments secured by underlying assets that generate non-correlated returns while producing steady income and the potential for capital appreciation," Jeremiah Silkowski, who will manage the company alongside Neil Roberts, said in a statement.

"This is achieved by investing in business-essential assets and equipment over diversified asset classes and industries avoiding assets that are directly tied to cyclical markets or have limited secondary markets," Silkowski added.

Winterflood Securities, Close Brothers Group PLC's market making unit, is advising on the IPO.

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Source: Alliance News

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