Australian Listed Investment Company Report – May 2021

Australia | Jun 01 2021

This story features PENGANA INTERNATIONAL EQUITIES LIMITED REGISTERED, and other companies. For more info SHARE ANALYSIS: PIA

Download related file: Monthly-LMI-Update_May-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. Also known as Listed Investment Trusts or Listed Managed Investments.

For comprehensive comparative data tables for LICs please see attached.

By Radek Zeleny, analyst Independent Investment Research

Pengana International Equities Limited ((PIA)) Appoints New Manager

On 10 May, PIA announced the replacement investment team for the management of the portfolio after Jordan Cvetanovski and Steven Glass abruptly exited the business in March. New Jersey based Harding Loevner LP have been appointed as the new investment team. Harding Loevner is a global equity manager with over 100 employees and over US$84b FUM. As a result of the appointment, PIA will adopt the Harding Loevner global equity strategy with the addition of PIA’s ethical screens.

PIA has stated that Harding Loevner’s investment philosophy supports PIA’s objective to provide shareholders with capital growth from investing in an ethically screened and actively managed portfolio of global businesses, in addition to providing shareholders with regular, reliable and fully franked dividends.

The IIR rating for PIA is currently “on watch” and will be reviewed once a full evaluation of the new investment team and strategy is completed.

MXT Raises $192m through Institutional Placement

On 26 April, MCP Master Income Trust ((MXT)) announced they had received binding commitments for 95.9m new units in MXT at a price of $2.00 per unit from wholesale and institutional investors, raising $192m.

The proceeds will be invested in accordance with the investment mandate and target return of MXT. The Metric’s Managing Partner, Andrew Lockhart, commented “The additional investor capital will provide for increased portfolio diversification which acts to lower investment risk, expected positive impact on total investor returns as new capital is deployed and invested, enhanced liquidity from the increased scale of MXT and expected further reductions in costs over time.”

MEC releases 1H21 Results

On 18 May, Morphic Ethical Equities Fund ((MEC)) released its financial results for the half year ended 31 March 2021. Strong portfolio performance for the period resulted in MEC declaring a fully franked interim dividend of 2.5 cents per share, a 150% increase on the previous interim dividend. Before payment of the dividend, the company had dividend coverage of in excess of five years at an annual dividend rate of 5 cents per share.

BTI Raise $4m From SPP

Bailador Technology Investments’ ((BTI)) share purchase plan closed on 18 May. BTI received applications of $4m from eligible shareholders. The SPP followed the $20m institutional placement completed in April with shares in the SPP offered at the same price as the institutional placement.

The capital will be used to capitalise on a pipeline of investments that the Manager believes represents good value for investors.

MA1 Suspended from Trading as the Restructure to an ETMF Continues

On 10 May, MA1 shareholders overwhelmingly voted in favour of restructuring the company as an exchange traded managed fund (ETMF). On 28 May, MA1 was suspended from trading and will be delisted on 1 June. Units in the newly created ETMF named Monash Absolute Active Trust (Hedge Fund) are being issued to shareholders on an in-specie basis and are expected to commence trading on the ASX under the new ticker MAAT on 10 June.

The ETMF will utilise the Single Unit (dual registry) Structure, which will allow for unitholders to buy and sell units either on-market or off-market.

APL Provides Update on Conditional Tender Offer (CTO)

Antipodes Global Investment Company Limited ((APL)) provided an update on the CTO during May. The CTO was announced on 31 August 2020 and was overwhelmingly approved by shareholders at the AGM in November 2020.

The CTO is the company’s primary discount management mechanism. The CTO is triggered if the average daily discount is greater than 7.5% for the 12-month period from 19 October 2020 to 18 October 2021. The average daily discount since the period began until 14 May 2021 is 12.1%. If triggered, the CTO provides shareholders the ability to sell APL shares to the company via an off-market buy-back at a price equal to the prevailing post-tax NTA less 2%. The company will buy back a maximum of 25% of issued capital.

Given the average daily discount remains above the discount trigger of 7.5%, unless the discount narrows substantially over the coming months the CTO will be triggered. Depending on where the share price is trading at end of the period, there may be an arbitrage opportunity for shareholders.

NSC Issues Bonus Options

Naos Small Cap Opportunities Company ((NSC)) has issued Bonus Options to shareholders on a 1-for-3 basis. The options will have an exercise price of $1.02 and an exercise date of 28 June 2024. The exercise price represents a 29.1% premium to the NSC share price at 30 April 2021.

WAM Strategic Value Limited ((WAR)) Offer Opens

The WAR IPO offer opened in May and is expected to close on 10 June 2021. The offer seeks to raise up to $250m through the issue of up to 180m shares at $1.25 per share. The company will seek to invest in a portfolio of LICs and LITs that are trading at a discount to NTA/NAV in which the reasons for the discount can be identified and the Manager believes it can provide or implement techniques and strategies that could assist with narrowing the discount. The portfolio will typically comprise 10 to 30 holdings with individual position sizes typically ranging from 1%-15%. Given the underlying investments, the portfolio is expected to be diversified by both underlying security and investment strategy. The initial portfolio is expected to primarily comprise LICs/LITs that are held by vehicles managed by Wilson Asset Management and are trading at a discount.

Independent Investment Research, “IIR”, is an independent investment research house based in Australia and the United States. IIR specialises in the analysis of high quality commissioned research for Brokers, Family Offices and Fund Managers. IIR distributes its research in Asia, United States and the Americas. IIR does not participate in any corporate or capital raising activity and therefore it does not have any inherent bias that may result from research that is linked to any corporate/ capital raising activity.

IIR was established in 2004 under Aegis Equities Research Group of companies to provide investment research to a select group of retail and wholesale clients. Since March 2010, IIR (the Aegis Equities business was sold to Morningstar) has operated independently from Aegis by former Aegis senior executives/shareholders to provide clients with unparalleled research that covers listed and unlisted managed investments, listed companies, structured products, and IPOs. IIR takes great pride in the quality and independence of our analysis, underpinned by high caliber staff and a transparent, proven and rigorous research methodology.

INDEPENDENCE OF RESEARCH ANALYSTS

Research analysts are not directly supervised by personnel from other areas of the Firm whose interests or functions may conflict with those of the research analysts. The evaluation and appraisal of research analysts for purposes of career advancement, remuneration and promotion is structured so that non-research personnel do not exert inappropriate influence over analysts.

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Evaluation and remuneration: The remuneration of research analysts is determined on the basis of a number of factors, including quality, accuracy and value of research, productivity, experience, individual reputation, and evaluations by investor clients.

INDEPENDENCE – ACTIVITIES OF ANALYSTS

IIR restricts research analysts from performing roles that could prejudice, or appear to prejudice, the independence of their research.

Pitches: Research analysts are not permitted to participate in sales pitches for corporate mandates on behalf of a Broker and are not permitted to prepare or review materials for those pitches. Pitch materials by investor clients may not contain the promise of research coverage by IIR.

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Other permitted activities: Analysts may be consulted by Firm sales personnel on matters such as market and industry trends, conditions and developments and the structuring, pricing and expected market reception of securities offerings or other market operations. Analysts may also carry out preliminary due diligence and vetting of issuers that may be prospective research clients of ours.

INDUCEMENTS AND INAPPROPRIATE INFLUENCES

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DISCLAIMER

This publication has been prepared by Independent Investment Research (Aust) Pty Limited trading as Independent Investment Research (“IIR”) (ABN 11 152 172 079), an corporate authorised representative of Australian Financial Services Licensee (AFSL no. 410381. IIR has been commissioned to prepare this independent research report (the “Report”) and will receive fees for its preparation. Each company specified in the Report (the “Participants”) has provided IIR with information about its current activities. While the information contained in this publication has been prepared with all reasonable care from sources that IIR believes are reliable, no responsibility or liability is accepted by IIR for any errors, omissions or misstatements however caused. In the event that updated or additional information is issued by the “Participants”, subsequent to this publication, IIR is under no obligation to provide further research unless commissioned to do so. Any opinions, forecasts or recommendations reflects the judgment and assumptions of IIR as at the date of publication and may change without notice. IIR and each Participant in the Report, their officers, agents and employees exclude all liability whatsoever, in negligence or otherwise, for any loss or damage relating to this document to the full extent permitted by law. This publication is not and should not be construed as, an offer to sell or the solicitation of an offer to purchase or subscribe for any investment. Any opinion contained in the Report is unsolicited general information only. Neither IIR nor the Participants are aware that any recipient intends to rely on this Report or of the manner in which a recipient intends to use it. In preparing our information, it is not possible to take into consideration the investment objectives, financial situation or particular needs of any individual recipient. Investors should obtain individual financial advice from their investment advisor to determine whether opinions or recommendations (if any) contained in this publication are appropriate to their investment objectives, financial situation or particular needs before acting on such opinions or recommendations. This report is intended for the residents of Australia. It is not intended for any person(s) who is resident of any other country. This document does not constitute an offer of services in jurisdictions where IIR or its affiliates do not have the necessary licenses. IIR and/or the Participant, their officers, employees or its related bodies corporate may, from time to time hold positions in any securities included in this Report and may buy or sell such securities or engage in other transactions involving such securities. IIR and the Participant, their directors and associates declare that from time to time they may hold interests in and/or earn brokerage, fees or other benefits from the securities mentioned in this publication.

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CHARTS

APL BTI MEC MXT NSC PIA

For more info SHARE ANALYSIS: BTI - BAILADOR TECHNOLOGY INVESTMENTS LIMITED

For more info SHARE ANALYSIS: MEC - MORPHIC ETHICAL EQUITIES FUND LIMITED

For more info SHARE ANALYSIS: MXT - MCP MASTER INCOME TRUST