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Duff & Phelps Global Utility Income Fund raises USD735m in IPO

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Virtus Investment Partners’ affiliated manager, Duff & Phelps Investment Management Co of Chicago, has raised USD735 million in a common stock offering for Duff & Phelps Global Utility Income Fund Inc. (NYSE: DPG), a closed-end fund.  Assuming full exercise of the underwriters’ overallotment option, which may or may not occur, the fund will have raised approximately USD840 million.

The fund, which begins trading today on the New York Stock Exchange, seeks to provide shareholders with total return, resulting primarily from both a high level of current income, with an emphasis on providing tax-advantaged dividend income, and growth in current income, and secondarily from capital appreciation by investing in domestic and foreign utility companies in the electric, gas, water, telecommunications, and midstream energy sectors. The fund may also use financial leverage, which it anticipates will initially take the form of a credit facility.

"Investors are searching for new sources of yield from their investments, and we are using our extensive knowledge, acquired by Duff & Phelps through over three decades of investment management experience in the utility space, to construct a portfolio that has the potential to offer attractive, tax-advantaged yield," says Nathan I Partain, president and chief investment officer at Duff & Phelps Investment Management. "We are seeing Treasuries and corporate bonds at or near historic lows. By comparison, over the past five years, utilities, telecom companies and midstream energy master limited partnerships have been among the highest-yielding equity sectors. We are excited about the timely opportunity this fund offers financial advisors and their clients in these sectors."

Deborah A Jansen, CFA, senior vice president, who specialises in the global electric, natural gas, and pipeline industries, is the lead portfolio manager and Eric J Elvekrog, CFA, vice president, who specialises in global telecommunications stocks, is the co-portfolio manager.

The initial public offering was led by Wells Fargo Securities, Citi, Morgan Stanley, UBS Investment Bank and Ameriprise Financial Services, Inc.

"This was one of the most successful closed-end fund offerings of the year as a result of two factors," says George R Aylward (pictured), president and chief executive officer of Virtus Investment Partners. "First, Duff & Phelps Investment Management has significant experience in managing closed-end funds, particularly in the utility sector. Additionally, the DPG offering benefited from the effectiveness of Virtus’ distribution and the breadth of our relationships, which allowed us to partner with a strong syndicate of underwriters.  We attracted a broad base of financial advisors who recognise the benefit of offering this investment solution to their clients."

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