Why Is AIQ Extending Its Unit Buy-Back Program for Another Year?
The Alternative Investment Trust (AIQ) has extended its on-market buy-back of up to 10% of issued units, signaling continued capital management efforts amid steady market conditions.
- Buy-back extended up to 12 months or until 3.1 million units repurchased
- Price cap set at 105% of 5-day volume weighted average price or adjusted NTA
- Buy-back subject to trading restrictions and compliance policies
- Responsible Entity holds no units and may suspend or vary the program
- Initial buy-back started on 9 September 2022
Extension of Buy-Back Program
One Managed Investment Funds Limited, acting as the Responsible Entity for the Alternative Investment Trust (AIQ), has announced an extension of its on-market buy-back program. Originally launched in September 2022, the buy-back allows AIQ to repurchase up to 10% of its issued units. This extension will keep the program active for up to another 12 months, or until approximately 3.1 million units have been bought back, or until the allocated funds are fully utilised.
Price and Trading Conditions
The buy-back is carefully structured to ensure purchases occur only when unit prices are favorable. Specifically, the buy-back price will not exceed 105% of the volume weighted average price over the previous five trading days, nor will it surpass the latest adjusted net tangible asset (NTA) value per unit. This dual-price cap mechanism aims to protect investors from overpaying and maintain alignment with the trust’s underlying asset value.
Additionally, the program is subject to compliance with AIQ’s Securities Dealing Policy, which restricts buy-back activity during prohibited trading periods. The Responsible Entity and its associates currently hold no units in AIQ, underscoring the independence of the buy-back process.
Strategic Implications
Extending the buy-back program reflects AIQ’s ongoing commitment to active capital management and enhancing shareholder value. By reducing the number of units on issue, the trust can potentially improve earnings per unit and provide support to the unit price. However, the announcement leaves some questions open regarding the pace of repurchases and the remaining funds available for the buy-back.
Investors will be watching closely to see how the buy-back activity unfolds over the coming months, particularly in relation to market conditions and AIQ’s adjusted NTA movements. The Responsible Entity retains the flexibility to vary, suspend, or terminate the program as needed, which adds a layer of responsiveness to changing circumstances.
Bottom Line?
AIQ’s buy-back extension signals steady capital discipline but leaves investors eager for clarity on repurchase timing and scale.
Questions in the middle?
- How much funding remains available for the buy-back and at what pace will units be repurchased?
- What impact will ongoing buy-back activity have on AIQ’s unit price and adjusted NTA?
- Could market volatility or regulatory changes prompt an early suspension or modification of the program?
