Benefits to Brokers

We work closely with the brokers of our investment company clients. This collaboration covers certain operational procedures, the on-going marketing of our mutual clients and helping to raise funds.

On the operations front, an example could include the implementation of a share buy-back programme to maintain a narrow share price discount to net asset value. If a discount protection policy is active then it might involve almost daily contact with the broker, particularly if shares are also regularly reissued out of Treasury. By acting as the central point of contact, our involvement can help to eliminate any need to involve the brokers or the board in dealing with any operational issues.

Our approach to marketing involves actively promoting our clients to new and existing shareholders. We know all the private client stockbrokers, wealth managers, pension funds and other institutions across the UK who buy investment companies. Our process is iterative and aims to stimulate demand for the shares. Active, constant marketing helps to grow companies, helps to keep discounts narrow and helps to lower total expense ratios. There are three main aspects to our approach:

• Understanding shareholders; who they are, what they need and what they think of the company and the way it is managed;
• Facilitating communication between the portfolio manager and shareholders by arranging regular presentations, road-shows and seminars;
• Ensuring that the investor information we produce is easily accessible and distributed in a constructive and effective way. This includes the production of monthly fact sheets which are emailed to a growing database of individual investment professionals who hold the shares on behalf of their institutions or clients;

All meetings are notified to the brokers and any relevant feedback or requests for more shares from investors are passed on. This ensures that best efforts can be made to sell shares to interested buyers before the company has to buy them back as part of the effort to control the discount.

When it comes to fundraising, our role is clear. We will share our ideas and contacts with the brokers in order to ensure that the fundraising has the best chance of success. There is no conflict in this arrangement. The brokers are paid a commission on money raised whereas we benefit only from on-going annual fees that tend to be based on the market capitalisation of the company.

Given the extent of our services and the depth of our knowledge of the sector, Frostrow Capital is perfectly placed to help brokers launch new investment companies. Involving us from the outset ensures that the appropriate service providers and advisers can be appointed and that the most efficient operational infrastructure can be installed. We know how things are supposed to work and we know all the best registrars, custodians, lawyers, accountants etc