The Initial Public Offering for 10 million ordinary shares at Rs. 50 each in the country’s first closed ended unit trust, NAMAL Acuity Value Fund, was oversubscribed last Monday, however, the offer was left open until 4.30 PM yesterday in a bid to exercise an oversubscription option and raise another 10 million shares.

"According to the offer document we had planned to issue 10 million shares at Rs. 50 each as the main issue. If the issue was oversubscribed we have an option to issue another 10 million shares. The first issue was oversubscribed and we will close the second tranche at 4.30 PM today whether or not it is fully subscribed," National Asset Management Limited (NAMAL) CEO S. Jeyavarman said last afternoon.

When announcing the IPO earlier this month, partners to the issue, NAMAL and fund managers Acuity Partners (Private) Limited—owned by Hatton National Bank and DFCC Bank—said the IPO’s target was to raise Rs. 1 billion through 20 million shares at Rs. 50 each.

"Rs. I billion was the target we set ourselves and it is the maximum limit this type of fund can raise through an IPO," Jeyavarman told the Island Financial Review.

"However, according to the prospectus the issue was to raise Rs. 500 million (10 million shares at Rs.50), and if oversubscribed to go for the balance Rs. 500 million," he said. This bit of information was not relayed to the press, only the fact that it was going to issue 20 million shares.

Jeyavarman said interest in the fund had been encouraging, especially with small and medium investors showing a lot of interest.

NAMAL Acuity Value Fund would invest in selected stocks listed in the Colombo Stock Exchange on behalf of investors.

The fund is to be liquidated in 10 years and the investors would receive their investments with returns.

During the ten years, investors would not be able to redeem their investments being a closed-ended Unit Trust but the units they hold can be traded in the Colombo Stock Exchange.

Apart from managing the investments in equities on behalf of investors, the fund also proposes to pay dividends annually. These dividends would comprise dividends paid by stocks the fund has invested in, capital gains made in buying and selling stocks and interest earned.

Investors trading at the stock exchange have to pay a brokerage fee of one percent of the transaction amount together with a 0.105 percent fee to the stock exchange, a 0.09 percent fee to the Securities and Exchange Commission (SEC) and another 0.05 percent to the Central Depository System (CDS).

However, investors in NAMAL Acuity Value Fund will be subject to a reduced tariff that has been introduced to encourage unit trust investments.

Investors in the fund would be able to negotiate brokerage fees while the stock exchange and the SEC have reduced their fees to 0.02 percent of the transacted amount while the CDS fee would be 0.01 percent of the transaction amount.