Canadian Advantaged Convertibles Fund has completed its $95 million initial public offering, the fund said Monday. The fund issued 9.5 million units at $10 per share. The units are listed on the Toronto Stock Exchange under the symbol ADC.UN.

The fund has been created to obtain exposure to a diversified portfolio comprised primarily of convertible debentures of Canadian issuers.

Considered a hybrid security, convertible bonds encompass characteristics of both bonds and stocks. Although issued as bonds, they can be converted into a specific number of shares of common stock. This “conversion ratio” is determined at issuance and the bonds can be converted to equity at any time by the bondholder during the life of the bond.

The fund will be managed by Toronto-based First Asset Investment Management Inc.

The fund’s investment objectives are to provide investors with quarterly tax-advantaged distributions, and the opportunity for capital appreciation.

The distributions are initially targeted to be 6% per year on the subscription price of $10.00 per unit ($0.15 per unit per quarter or $0.60 per year). The fund will not have a fixed quarterly distribution amount but intends to set periodic distribution targets.

The syndicate of agents for this offering was led by CIBC, National Bank Financial Inc. and RBC Capital Markets, and includes, BMO Capital Markets, Scotia Capital Inc., TD Securities Inc., HSBC Securities (Canada) Inc., Raymond James Ltd., Canaccord Genuity Corp., Wellington West Capital Markets Inc., Dundee Securities Corporation, Macquarie Private Wealth Inc. and Mackie Research Capital Corporation.

Under over-allotment option option, the agents may acquire an additional 850,000 units at $10 per unit exercisable at any time during the next 30 days.

IE