RiverNorth Capital Management (RiverNorth), an investment management firm specialising in opportunistic strategies, has launched the RiverNorth Opportunistic Municipal Income Fund, a new municipal bond-focussed closed-end fund.
RiverNorth will act as the investment adviser to the fund, and MacKay Shields will act as sub-adviser. The Fund was priced at USD20.00 per share, and trading on the New York Stock Exchange began on 26 October, 2018 under the symbol RMI.
The fund’s primary investment objective is current income exempt from regular US federal income taxes (but which may be includable in taxable income for purposes of the Federal alternative minimum tax). The fund’s secondary investment objective is total return. As the investment adviser, RiverNorth will strategically allocate the Fund’s assets between two principal investment strategies: the Tactical Municipal Closed-End Fund Strategy, managed by RiverNorth, and the Municipal Bond Income Strategy, managed by MacKay Shields. RiverNorth believes that fundamental and technical factors look positive for the municipal bond market, and significant opportunity exists for discount narrowing in the municipal closed-end fund market, as current discounts are in the 99th percentile of widest discounts.
“We are delighted to partner with the distinguished municipal bond team at MacKay Shields,” says Patrick Galley (pictured), RiverNorth’s Chief Investment Officer. “The fund seeks to capitalise on market inefficiencies in the municipal closed-end fund and municipal bond markets in order to provide investors with a tax-efficient municipal bond strategy with the potential to deliver enhanced income and additional returns. Through a relative value approach, the fund will seek to trade and tactically allocate to municipal closed-end funds when discounts are attractive and conversely, tactically decrease our exposure and allocate more capital to the municipal bond income strategy when discounts narrow.”
“MacKay Shields’ research driven investment approach and intense focus on mis-priced municipal securities provides an excellent complement to RiverNorth’s proficiency in deriving value from closed-end fund discount trading opportunities,” says Robert DiMella, Executive Managing Director and Portfolio Manager of MacKay Shields. “Together, we believe the firms’ complementary strategies will allow the Fund to opportunistically generate returns across market cycles.”
The fund raised gross proceeds of approximately USD119 million in its initial public offering of shares of common stock. Should the underwriters exercise the over-allotment option in full, which may or may not occur, the fund will raise gross proceeds of approximately USD136.85 million.
The lead managers of the underwriting syndicate were UBS Investment Bank, Morgan Stanley, Wells Fargo Securities, RBC Capital Markets and Stifel.