Sprott Physical Gold Trust (TSX:PHY.U) has completed its initial public offering of 40 million units for gross proceeds of US$400 million, Sprott Asset Management LP announced Wednesday.

The units are listed on the NYSE Arca and the Toronto Stock Exchange under the symbols PHYS and PHY.U, respectively.

The trust was created to invest and hold substantially all its assets in physical gold bullion. It aims to provide a secure, convenient and exchange-traded way for investors interested in holding physical gold bullion without the inconvenience that is typical of a direct investment in physical gold bullion. The trust intends to achieve its objective by investing primarily in long-term holdings of unencumbered, fully allocated, physical gold bullion and will not speculate with regard to short-term changes in gold prices.

The trust will not invest in gold certificates or other financial instruments that represent gold or that may be exchanged for gold. It expects to own only London Good Delivery physical gold bullion, which will be stored at the Royal Canadian Mint.

The trust will be managed by an experienced team of precious metals investors from Sprott, including Eric Sprott, John Embry, Charles Oliver and Jamie Horvat.

In addition to daily liquidity through the NYSE Arca and the Toronto Stock Exchange, unitholders will be able to redeem units on a monthly basis for physical gold bullion, for a redemption price equal to 100% of the NAV of the redeemed units, less related expenses, including handling, delivery and storage.

The trust has also granted the underwriters an over-allotment option which is exercisable in whole or in part to purchase up an additional 6 million units at US$10 per unit up to 30 days from February 25.

The offering was made simultaneously in the United States and Canada through a syndicate of underwriters led by Morgan Stanley and RBC Capital Markets in the U.S. and RBC Capital Markets and Morgan Stanley in Canada. The underwriters for the offering in the U.S. included HSBC Securities (USA) Inc. and the underwriters for the offering in Canada included BMO Capital Markets, Scotia Capital Inc., TD Securities Inc., Canaccord Adams, GMP Securities L.P., Dundee Securities Corporation and HSBC Securities (Canada) Inc.

IE