Gryphon’s Unit Purchase Plan Raises Questions on Dilution and Market Appetite

Context and Offer Details

Gryphon Capital Income Trust (ASX – GCI), managed by One Managed Investment Funds Limited, has unveiled a significant capital raising initiative through a Unit Purchase Plan (UPP). This non-underwritten offer invites existing unitholders in Australia and New Zealand to purchase additional units at an attractive price point. The offer price of A$2.00 per unit represents a modest 2.85% discount to the recent five-day volume weighted average price (VWAP), signaling a strategic move to incentivize participation without heavily diluting existing holders.

The UPP opens on 14 October 2025 and closes on 30 October 2025, with results expected to be announced on 3 November 2025. Eligible unitholders can subscribe for up to A$30,000 worth of new units, with a minimum application of A$1,000. The plan is designed to raise up to approximately A$337 million through the issuance of 168.5 million new units, a sizeable capital injection for the Trust.

Strategic Implications and Use of Funds

The proceeds from this capital raising will be deployed to support incremental portfolio management consistent with the Trust’s existing investment strategy. Gryphon Capital Investments Pty Ltd, the investment manager and a Barings company, oversees a diversified fixed income portfolio valued at nearly A$5 billion. This fresh capital infusion is expected to enhance the Trust’s capacity to manage its assets actively and pursue new opportunities within the fixed income market.

Importantly, the offer does not require unitholder approval, streamlining the process and reflecting confidence from the Responsible Entity in the Trust’s strategic direction. However, the Responsible Entity retains discretion to scale back applications if demand exceeds supply, ensuring a balanced allocation among participants.

Market and Investor Considerations

From an investor perspective, the UPP presents an opportunity to increase exposure to a fixed income trust managed by a globally connected firm, Barings, which manages over US$456 billion in assets. The slight discount to market price is a common feature in such offers, designed to reward loyalty and encourage participation from existing unitholders. However, potential dilution and the final scale-back outcome remain variables to watch closely.

The timing of the offer, following a recent wholesale placement at the same price, suggests a coordinated capital strategy aimed at strengthening the Trust’s balance sheet and investment flexibility. Investors will be keen to see how the market responds once the new units commence trading on 7 November 2025.

Looking Ahead

As Gryphon Capital Income Trust embarks on this capital raising, the broader fixed income market environment and investor appetite for income-generating assets will play a critical role in the offer’s success. The Trust’s ability to deploy the raised funds effectively will be a key determinant of future performance and unitholder value.