Units of Claymore Gold Bullion Trust lost a bit of its shine when it began trading on Thursday, but its warrants kept the offering sweet.
The initial public offering of the closed-end fund was priced at $10, including $9.50 per unit and 50 cents for the accompanying warrant. The units closed down 10 cents at $9.40 a piece. Each warrant, however, rose 13 cents to close at 63 cents.
The closed-end fund raised $400-million, and is the largest initial public offering so far this year in Canada.
The fund has granted agents an over-allotment option to purchase up to 6-million additional units during the next 30 days, Claymore Investments Inc. said.
If the fund trades higher the IPO price in the next six months, investors in the fund can profit from a sweetener in the form of a warrant per unit. Each warrant is exercisable at $10 until the end of trading on Nov. 28.
The fund invests in gold bullion, which is priced in U.S. dollars, but the offering hedges its U.S.-dollar currency back to the Canadian dollar. The fund also will automatically convert into an exchange-traded fund if its units trade at a discount to net asset value in six months.