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14 August 2014

Speechly Bircham advises India Capital Growth on bonus issue of Subscription Shares

This article was written prior to the formation of Charles Russell Speechlys, through the merger between Charles Russell and Speechly Bircham.

Victoria Younghusband and James Griffiths recently acted for India Capital Growth (ICG), an AIM traded Fund, on its bonus issue of 37,500,000 Subscription Shares on the basis of one Subscription Share for every two Ordinary Shares held on the record date. 

The Subscription Shares have a single exercise date on 6 August 2016 at an exercise price of 61p, equivalent to the NAV per Ordinary Share at 31 July 2014 and started trading on AIM on 12 August. The issue has a novel feature in that the Company has the option to bring forward the exercise date at any time after 6 August 2015 if the Ordinary Share price exceeds the exercise price by 5% or more for a minimum of 10 trading days. This limits the potential dilution.

At the EGM approving the bonus issue, Shareholders also approved changes to the continuation vote which was due at the AGM in 2015 (and every 5 years thereafter). The next continuation vote will be held in 2017 (and every 3 years thereafter) but only if either the market cap averages less than £30m over the preceding year; or the diluted NAV over three years underperforms the BSE Mid Cap Index total return by more than a cumulative 5% (adding back any dilutive effect of the Subscription Share issue).

If the Subscription Share Rights were to be exercised in full, the Company would receive total proceeds of £22.9m and would increase its gross assets by a third from £45.7m (as at 31 July 2014) to £67.9m.