Toronto-based Aston Hill Capital Markets Inc. Tuesday announced the closing of the domestic initial public offering of ING High Income Floating Rate Fund.
The closed-end fund raised $80 million, including $76 million from the sale of 7.6 million Class A units and US$4 million from the sale of 400,000 Class U units.
The fund invests in a diversified portfolio consisting primarily of first lien and second lien secured floating rate loans of non-investment grade North American borrowers, actively managed by sub-advisor ING Investment Management Co. LLC. The portfolio will consist primarily of secured floating rate corporate loans that are expected to generate increased returns in the event that short term interest rates rise above any applicable London Interbank Offered Rate (LIBOR) floors.
Aston Hill says the fund will not have a fixed distribution policy, but intends to make monthly distributions based on the actual and expected returns on the portfolio, which may vary with changes in interest rates.
The fund’s initial distribution target is expected to be $0.05417 per Class A unit per month, representing an initial yield on the unit issue price of 6.5% per year.
The ING Senior Loan Group, the unit of the sub-advisor that will manage the portfolio, is located in Scottsdale, Ariz. The group currently manages over US$17 billion in assets that are substantially similar to the loan investments that it will manage for the fund.
The units are being offered for sale by a syndicate of agents co-led by BMO Capital Markets and CIBC and including RBC Capital Markets, Scotiabank, TD Securities Inc., GMP Securities L.P., National Bank Financial Inc., Canaccord Genuity Corp., Macquarie Private Wealth Inc., Raymond James Ltd., Desjardins Securities Inc., Mackie Research Capital Corp. and Manulife Securities Inc.
Class A units are listed on the Toronto Stock Exchange (TSX:IHL.UN).