Kapstream Capital, a subsidiary of Janus Henderson Investors, has lodged a product disclosure statement for the forthcoming initial public offering of the Kapstream Investment Trust (KIT). KIT is a Listed Investment Trust managed by industry veterans Daniel Siluk, Dylan Bourke, and Mark Bayley.
The Trust is intended to provide investors with access to investment grade Australian and global fixed income securities as well as Australian private asset backed securities. It is expected to be listed on the Australian Securities Exchange (ASX) under the ticker ‘KIT’ in March this year.
KIT is targeting a capital raise between $200–300 million through the issuance of new units. $145 million has already been secured through a cornerstone offering process. KIT’s portfolio will initially be constructed by investing in a blend of Kapstream’s existing funds – with approximately 50% allocated to the Kapstream Absolute Return Income Fund and Kapstream Absolute Return Income Plus Fund, and the remaining 50% to the Kapstream Private Investment Fund. KIT aims to provide regular distributions (expected monthly), targeting a return of the RBA Cash Rate plus 3.50% per annum (pre-tax, net of management fees and costs).
“With the decline of Additional Tier 1 capital instruments (hybrids), investors are increasingly seeking reliable listed alternatives,” said Alex Veroude, Global Head of Fixed Income at Janus Henderson. “KIT is intended to provide access to diversified, institutional-grade credit strategies in a listed format, reflecting our commitment to developing innovative solutions for clients.”
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Unlike older-style, more traditional LITs, KIT incorporates liquidity features including limited quarterly redemption buyback windows and potential on-market buybacks to attempt to mitigate NAV discount risks. The inclusion of relatively liquid fixed income securities helps support buyback windows, providing additional flexibility compared to structures that rely solely on illiquid private debt assets. KIT also differentiates itself by its asset backed securities focusing on underlying private borrowers that are diversified across mortgage, auto, personal, professional and other receivable and loan types, rather than corporate or real estate private debt, offering private investors greater diversification.
“We have seen a growing number of clients looking for ways to dynamically combine public and private credit to enhance portfolio liquidity while still targeting compelling returns,” said Daniel Siluk, Managing Director and Lead Portfolio Manager at Kapstream. “KIT was developed as a direct response to that need – offering a flexible, diversified solution that leverages our expertise across both markets.”
“We are particularly excited about providing investors exposure to pre-public securitisation markets (warehouses). By investing in other non-bank lenders through these structures we can access high-quality, short-duration assets with what we consider to be an attractive risk-adjusted return profile,” said Dylan Bourke, Managing Director and Portfolio Manager at Kapstream. “Our private securitisation strategy provides exposure to thousands of underlying loans via structures often with a host of investor friendly enhancements such as first loss capital from the loan originators. Diversification, subordination and excess spread measures, which are generally in warehouses, are features we expect to support the resilience of KIT’s income.”
