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Monthly Listed Investment Trust Report – April 2021

Australia | May 04 2021

This story features QUALITAS REAL ESTATE INCOME FUND, and other companies. For more info SHARE ANALYSIS: QRI

Download related file: Monthly-LMI-Update_April-2021

A Listed Investment Company (LIC) is a listed investment vehicle that offers investors access to a diversified portfolio of shares in other companies also listed on the stock market.

Note: For comprehensive comparative data tables for LICs and ETFs please see attached.

By Radek Zeleny, analyst Independent Investment Research

Qualitas Real Estate Income Fund ((QRI)) Raises $54m

On 1 April, QRI announced the successful completion of a $54m placement to a select group of existing shareholders and new wholesale investors. As part of the placement, QRI issued 33.75m new fully paid ordinary shares at $1.60 per share, representing a 0.94% discount to the 10 day VWAP leading into the announcement.

The new shares are within the 15% placement capacity and therefore did not require shareholder approval. With the Trust’s existing capital fully deployed, the funds raised will be used to undertake further Commercial Real Estate (CRE) loans that are in line with the Trust’s investment strategy. The capital is expected to take 2-3 months to deploy.

The Manager will seek to take opportunities to continue to grow the size of the Trust to: (i) improve portfolio diversification; (ii) increase CRE debt market share; (iii) achieve operating cost efficiencies (iv) increase diversity of unit holders; and (v) increase liquidity.

Bailador Technology Investments ((BTI)) Raises $20m

BTI announced a capital raising of $20m from a share placement to institutional investors. The capital was raised through the issue of new shares at $1.37 per share, which represented a discount of 4.9% to the share price leading into the announcement.

The company also intends to undertake a Share Purchase Plan (SPP) to give existing shareholders the opportunity to acquire additional shares at the same price at as the institutional placement.

The SPP offer is expected to close on 18 May 2021. The capital raised will be used to capitalise on a pipeline of investments that the Manager believes represents very good value for investors.

KKR Credit Income Fund ((KKC)) Implements Structural Changes

On 19 April, KKC announced a $20m buy-back program over the next 12-months in an attempt to address the discount to NAV that the Trust continues to trade at. Further to this, KKC are increasing the frequency of the distribution from quarterly to monthly, with the first monthly distribution expected to be paid in August 2021.

Earlier in the year, KKC announced that the Trust’s holding of the Global Credit Opportunities Fund (GCOF) was being moved into a separately managed account (SMA) to reduce costs and enhance flexibility and liquidity in the structure.

The transfer of assets was done in two phases – 80% of GCOF assets were transferred across to the SMA in January with the remaining 20%of assets transferred in mid-April. The transfer of assets means that the Trust will no longer be invested in the GCOF fund but the SMA will be managed by the same investment team and invest using the same strategy alongside the GCOF fund.

NCC Completes $23m Convertible Notes Offer

Naos Emerging Opportunities Company Limited ((NCC)) raised $23m through the issue of listed, redeemable, unsecured, unsubordinated, convertible notes (the Notes). The Notes were issued on 15 April 2021 and commenced trading on the ASX on 20 April 2021 under the code NCCGA.

The Notes have a face value of $100 and will pay a fixed coupon of 4.50% p.a. from the issue date until the first step up date (30 September 2026). From the first step up date, the coupon will increase to 5.50% p.a. until the second step up date (30 September 2027). The coupon will increase to 6.50% p.a. from this date until the Maturity Date.

Coupons will be paid semi-annually on 31 March and 30 September. Unless converted or redeemed earlier, or purchased by NCC and cancelled, the Notes will be redeemed on the Maturity Date of 30 September 2028.

Noteholders may elect to convert their holding by issuing a conversion notice at any time during the conversion period (from the issue date of the Notes until the first step up date). If a conversion notice is received and accepted, the Notes will convert into NCC ordinary shares based on the conversion price ($1.15 per share subject to adjustment for certain dilutionary and other capital transactions by NCC).

WAM Announces New Strategic Value Strategy

Wilson Asset Management ((WAM)) is seeking to raise capital and list the WAM Strategic Value strategy. The strategy will focus on identifying on capitalising on share price discounts to underlying asset values of listed companies, primarily LICs, LITs and other closed-ended investment vehicles.

This is an area that WAM has historically been very active in. A Prospectus is expected to be released in early May with an IPO expected in the coming months.

FPC Raises $5.26m in SPP Fat Prophets Global Contrarian Fund Limited ((FPC)) raised $5.26m in April through the completion of a Share Purchase Plan (SPP).4.14m shares were issued at $1.27 per share (five-day VWAP prior to the issue).

MA1 Releases Details of Restructure to an Active ETF

On 1 April, Monash Absolute Investment Company Limited ((MA1)) provided a Notice of General Meeting and the Explanatory Memorandum for the restructure of the company to an Active ETF. The independent expert appointed by the Board for the proposed transaction, concluded that the proposed transaction is fair and reasonable.

A General Meeting will be held on 10 April to approve the restructure. The Active ETF will utilise the Single Unit Structure, which will allow for unitholders to buy and sell units either on-market or off-market.

The key reason the company is seeking to undergo the restructure is to remove the discount to NTA that the company has traded at, which has been a cause of frustration for both the Manager and shareholders.

Through the new structure, the Manager seeks to provide a minimum distribution of 6% p.a, payable quarterly, lower the management fee to 1.25% and increase the hurdle on the performance fee to RBA Cash Rate + 5%.

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For more info SHARE ANALYSIS: MA1 - Monash Absolute Investment Company Ltd