Home > UTC Media Centre > Investment Segment > Calypso demand brings IPO extension

November 16th, 2015

Calypso demand brings IPO extension

 

To facilitate demand among individual and institutional investors, the Unit Trust Corporation has extended the initial public offering (IPO) of the company’s most recent closed-end exchange-traded product, the Calypso Macro Index Fund to December 4, 2015.

The Calypso Fund is the Caribbean’s first exchange-traded macro index fund and the first UTC fund to be listed on the Trinidad and Tobago Stock Exchange. While it is the first fund of its kind – for both the UTC and the Trinidad and Tobago economy – it is also firmly rooted in the UTC’s original mandate to foster a culture of saving and investment through education and innovative solutions. It also allows everyone access and participate in the country’s capital markets.

We have decided to extend the Fund’s closing date from November 6 to December 4, 2015, to meet the Fund’s demand and allow investors more time to secure their participation in the local and global stock markets.  It also provides the brokers managing this offering with adequate time to process the orders they have received. In addition, it ensures that institutional investors with new or changing boards of directors have adequate time to secure necessary approval from their boards.

A stock or share is a right to ownership of a company.  It is also known as equity.  Equity can either be privately or publicly held on an exchange.  The reason why owners of a company would want their ownership rights publicly held is to raise capital to expand their business.  Investors attain the opportunity to own a piece or share in the company, vote at the company’s AGM, obtain a portion of the profits through dividend payments and see the value of the stock potentially increase over time.  The merits of investing in equity appear attractive to the risk tolerant investor.  Over the past three decades, this attractiveness led to some international developments whereby some investor sponsors packaged their equities into a fund to reflect certain investment objectives that were unlike the typical mutual fund.

The Calypso Fund is a medium to long term investment which will provide investors with an opportunity to participate in the local and global stock markets. With the purchase of one unit, investors will have access to the largest Trinidad & Tobago companies listed on the Trinidad and Tobago stock market as well as a host of approximately 100 energy companies.  The Calypso Macro Index Fund’s weightings are such that a little over one third of its composition will represent the energy sector through global energy companies while the local stocks will represent two thirds, similar to the revenue structure of Trinidad & Tobago.

Buy the market

There are several benefits to be derived from the Fund. Firstly, investors will be able to purchase the entire market with one unit.  More choices have been presented to local investors.  Rather than going from stock to stock, investors can “buy the market”.  By doing so, the investor will have instant diversification to equities.  This gives an appropriate introduction to local stock market for novice equity investors.  Digging further investors can also do some tactical positioning.  Investors can use the Fund as their equity base or benchmark and then proceed to acquire certain local and international stocks strategically, in order to optimize their equity portfolio.

Secondly, for those who have been struggling to attain certain stocks in the market, through the acquisition of units in the Fund, investors would have the ability to hold these thinly-traded stocks.  As the Fund represents Trinidad and Tobago, all of the largest publicly listed Trinidad & Tobago stocks would be in the Calypso Macro Index Fund.

Another benefit is the fee structure.  Given that the objective of the Fund is to hold the securities and attempt to track the respective stocks, the management fees are substantially lower than the typical mutual fund.

Finally, investors need not worry about queuing for U.S. dollars in order to attain the energy component of the Calypso Macro Index Fund.  Investors will be able to use their TT dollars to purchase the units and still have access to approximately one third of their TT dollars in U.S. Dollar denominated equity.  Hence, if the U.S. Dollar were to appreciate against the TT Dollar, the investor will benefit.

Innovation

The UTC’s core objective has always been to enable unit holders’ participation in the long-term productive assets of this country, and we are aware that those assets are represented by the shares in companies across all sectors of this economy.  Consistent with our culture of innovation, the Calypso Macro Index Fund is yet another initiative undertaken by the UTC to fill a void in the investing landscape and increase value for our unit holders.

The Fund is a “closed-end fund,” with an initial value of $500M, where 20 million units will be sold at a price of $25 per unit. Once subscribed, unit holders can buy from or sell to other investors directly through the stock exchange for up to 10 years. Each unit will comprise 16 top, locally listed companies as well as close to 100 energy companies from across the globe. The minimum initial investment is only TT$1,000 and a unit will be priced at TT$25.00.

 

The process to attain access to the local stock market is easy and similar to opening a bank account. In order to open a brokerage account investors must provide to their stockbroker the following:

  • Two valid forms of ID
  • A Proof of address – a utility bill or bank statement (no more than 3 months old)
  • A completed Trinidad & Tobago Central Depository (TTCD) Agreement Form, which is available at any stockbroker.

Investors with existing brokerage accounts who wish to subscribe to the Calypso Macro Index Fund would need to present the following:

  • A valid form of ID
  • A recent bank statement as a proof of account number (only local savings savings and chequing accounts will be accepted)
  • Completed Calypso Macro Index Fund purchase notification forms
  • A TTCD account number

With one unit, the Fund reflects the business drivers of the country, receives the income generated from these companies and distributes it to its holders.  The concentration of the Fund illustrates the composition of the revenue drivers of Trinidad and Tobago.  Also, like a true democracy, access and choice to the equity market are delivered to masses.

In the next few weeks, through the close of the Calypso Fund offering, we look forward to engaging legacy investors, as well as new ones, around the UTC’s unique offerings.  December 4th is also significant as it marks the culmination of the UTC’s 33rd anniversary week celebrations reinforcing our founding mission of creating more opportunities for individuals to access our economy’s capital markets.