London, UK, 21 June 2019
Edison issues initiation on Baker Steel Resources Trust (BSRT)
Baker Steel Resources Trust (BSRT) is unique in offering UK investors access to early-stage (pre-IPO) and specialist listed opportunities in the natural resources sector, which can be higher-risk but offer the prospect of outsize potential returns. The highly experienced investment team is very selective and aims to generate gains through specific risks being mitigated as projects progress along the development curve, rather than relying on commodity price rises. Investments are typically made via convertible loan notes, often in stages, to limit downside risk. BSRT proactively works with investee companies to unlock value and investments can take a number of years to mature. Performance has varied since its launch (although ahead of most peers over one and three years), but BSRT's investment team sees a number of near-term catalysts for potentially significant valuation gains.
Recent NAV returns have been positive, and BSRT's 16.4% share price discount to NAV is narrower than its 20.7% one-year average. Under its policy to distribute at least 15% of net realised gains, BSRT conducted a tender offer for 9.7m shares at 51p per share in May 2019, following which it held a 2.0% net cash position. Future distributions could be made via dividends, supported by prospective royalty income.
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