Australian Listed Investment Company Report July 2022

Weekly Reports | Jul 01 2022

This story features TRIBECA GLOBAL NATURAL RESOURCES LIMITED, and other companies. For more info SHARE ANALYSIS: TGF

Download related file: IIR-Monthly-LMI-Update_30-June-2022

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.

 LMI Market News

IIR Reaffirms Recommended Rating for Tribeca Global Natural Resources Limited ((TGF))

During the month, IIR reaffirmed its Recommended rating for Tribeca Global Natural Resources Limite. TGF provides exposure to a concentrated, high-conviction and actively managed portfolio of long and short positions in natural resources equities and credit positions as well as outright commodities positions. The portfolio is managed by Tribeca Global Resources Pty Ltd, which forms part of the Tribeca Group, a global asset manager that was founded in 1998 and has $3.2b in funds under management.

The strategy is based on a blend of top-down macro-economic analysis and sector and thematically focused bottom-up fundamental corporate analysis. The strategy is flexible (intentionally), with the Manager having the ability to invest throughout the capital structure (equity and debt) and across the resources sector value chain. While the Manager has a global mandate, the Manager’s focus is on developed, rather than emerging market jurisdictions. Net and gross exposure will not exceed 150% and 200%, respectively.

The Company will seek to generate shareholders a return in excess of 15%pa (after fees and expenses) over the long-term, which the Manager considers to be a period of more than 5 years.

Given the global mandate, the Company will have direct exposure to foreign exchange movements. The Manager will seek to fully hedge the foreign currency exposure of the portfolio. The Manager will seek to achieve this through a combination of natural hedges and foreign exchange forwards and contracts.

The full report can be found on the IIR website (www. independentresearch.com.au).

MXT Raises $187m Through Placement to Wholesale and Institutional Investors

Metrics Master Income Trust ((MXT)) raised $187.3m through the issue of 93.67m new units to Wholesale and Institutional investors. Units were issued at $2.00 per unit. MXT had 879.2m units on issue post the issue of the new units.

Capital raised will be invested in accordance with the investment mandate and target return of MXT.

WAM Leaders to Merge with Absolute Equity Performance Fund

On 14 June 2022, WAM Leaders Limited ((WLE)) announced it had entered into a Scheme Implementation Agreement (Scheme) with Absolute Equity Performance Fund Limited ((AEG)) for the merger of the two companies. The Scheme proposes that WLE will acquire 100% of the shares in AEG, with AEG shareholders receiving WLE shares as consideration. The number of WLE shares issued will be based on the ratio of the pre-tax net tangible assets (NTA) of the two companies on the Calculation Date.

The merger comes after the announcement by AEG in February 2022, in which the Board advised it was evaluating a range of alternatives to maximise value for shareholders.

It is the intention of the WLE board that the AEG shareholders who receive WLE shares will be eligible for the FY22 final dividend paid by WLE. AEG shareholders are expected to vote on the Scheme at a meeting scheduled to be held in September 2022.

The merger will provide AEG shareholders the ability to realise the value of their investment with AEG shares trading at a discount for a sustained period of time. For WLE shareholders, the acquisition is expected to increase the shareholder base which has the benefit of improving liquidity.

Hamish Douglass to Return to Magellan as a Consultant

During the month, Magellan Financial Group Limited ((MFG)) announced the Magellan Co-Founder, Hamish Douglass, will resume working with the business in a consultancy role. In his role, Hamish will provide investment insights, including geopolitical and macroeconomic views. Hamish ceased to be a permanent member of Magellan’s staff on 15 June 2022 and will commence the new role on 1 October 2022.

FOR Estimates Half-Yearly Distribution 7.5 Cents Per Unit

On 17 June 2022, Forager Australian Shares Fund ((FOR)) advised of an indicative half-yearly distribution of 7.5 cents per unit. The distribution comprises an ordinary distribution of 4 cents per unit and a special distribution of 3.5 cents per unit.

On 2 June 2022, the Fund announced an indicative special distribution estimate of 6.5 cents per unit for the period, however this was subsequently reduced to 3.5 cents per unit due to realised losses post the initial announcement. The actual distribution amount is expected to be announced to the market on 7 July 2022. If the distribution is as advised, distributions declared for the FY22 period would total 11.5 cents per unit. This represents a distribution yield of 9.58% based on the market price as at 29 June 2022.

In November 2021, the Fund announced changes to the distribution policy. The intention of the new distribution policy is to pay ordinary distributions every six months and pay special distributions in years where the taxable income of the Fund is significantly in excess of the ordinary distributions.

Joycelyn Morton Retires From ARG Board

On 30 June 2022, Argo Investments Limited ((ARG)) announced Joycelyn Morton will be retiring from the Board, effective immediately. Joycelyn has served on the Board since 2012 and remains a founding director of Argo Global Listed Infrastructure ((ALI)).

In light of the retirement of Joycelyn, ARG has announced the appointment of Lianne Buck to the Board as an independent director. Lianne has over 20 years’ experience in Australian and global investment markets. Lianne commenced her executive career in Canada as a Chartered Accountant before working in various roles for Macquarie Group, Westpac Banking Corporation, Hastings Funds Management and NSW Treasury Corporation where she was Head of Direct Investments and Infrastructure. Lianne has a Bachelor of Commerce degree and is a member of the Australian Institute of Company Directors.

Lianne is an experienced company director and is currently also a Non-executive Director of AusNet Services and ISPT Pty Ltd. Previously she served on the Boards of Spark Infrastructure, Australian Pacific Airports Corporation and Utilities Trust of Australia Pty Ltd.

RF1 Estimates Half-Yearly Distribution of 24.5 Cents Per Unit

Regal Investment Fund ((RF1)) has disclosed an estimated final distribution of 24.5 cents per unit. The distribution has a Record Date of 1 July 2022. The final distribution is expected to be calculated and announced to investors in mid-July.

The estimated distribution takes the full year distribution to 34.5 cents per unit, representing a distribution yield of 10.9% based on the market price as at 29 June 2022.

The Distribution Reinvestment Plan (DRP) will be available to unitholders as at the Record Date. Units issued under the DRP will be issued at the lower of the prevailing market price or net asset value.

PE1 Declares Distribution of 3.24 Cents Per Unit

Pengana Private Equity Trust ((PE1)) has declared a half-yearly distribution of 3.243 cents per unit. The distribution has a record date of 4 July 2022 and is scheduled to be paid on 22 July 2022. The total distribution declared for the FY22 period is 6.34 cents per unit and represents a distribution yield of 4.48% based on the market price as at 29 June 2022.

AIQ Raises $3.2m through Placement & Seeks to Implement Capital Management Initiatives

During the month, Alternative Investment Trust ((AIQ)) raised $2.76m through the issue of 25.1m shares at a price of $0.11 per share to Wholesale investors. The price of the new units, represented a 5.7% discount to AIQ’s adjusted net tangible assets as at 31 May 2022.

As disclosed in the announcement, the Trust is seeking to raise up to $3.2m as part of the Placement. In addition to the new units issued, at the upcoming EGM the Manager will be seeking approval for the issue of approximately 4.0m units to be issued to entities associated with the Manager.

The proceeds from the capital raised will be used in line with AIQ’s existing investment strategy. The Investment Manager believes that the investment environment, particularly in the secondary market is currently attractive due to the recent volatility. The capital raised is expected to be deployed in the near term through the Trust’s investment in the Warana 2021 Fund.

In addition to the capital raise, AIQ announced the implementation of a number of initiatives including:

Distribution Reinvestment Plan (DRP) – AIQ intends to reinstate the DRP for the upcoming distribution which has been suspended since 18 November 2021.

Buy-Back Facility – AIQ intends to commence an on-market buy-back program. Under the buy-back AIQ intends to purchase units if they trade at a discount to the adjusted NTA of the Trust. The buy-back is intended to commence after the DRP pricing period.

1 for 10 Unit Consolidation – At an Extraordinary General Meeting (EGM), which the Trust intends to call, the Trust will be seeking approval for a 1 for 10 unit consolidation. At the EGM, the Trust will also be seeking approval for a number of initiatives to give the Trust capital flexibility including a refresh of the Trust’s placement capacity.

The WAM Active and Keybridge Capital Saga Continues

During the month, WAM Active Limited ((WAA)) announced that it had received a statement of claim filed in the Federal Court of Australia by Keybridge Capital Limited ((KBC)). KBC is seeking declarations to overturn the result where 87% of WAA shareholders voted against the resolutions at the meeting called by KBC, in which it was seeking approval for an off-market takeover of WAA. WAA has stated that it wholly rejects the claim and will be defending the matter.

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.

Supervision and reporting lines: Analysts who publish research reports are supervised by, and report to, Research Management. Research analysts do not report to, and are not supervised by, any sales personnel nor do they have dealings with Sales personnel

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.

No promotion of issuers’ transactions: Research analysts may not be involved in promotional or marketing activities of an issuer of a relevant investment that would reasonably be construed as representing the issuer. For this reason, analysts are not permitted to attend “road show” presentations by issuers that are corporate clients of the Firm relating to offerings of securities or any other investment banking transaction from that our clients may undertake from time to time. Analysts may, however, observe road shows remotely, without asking questions, by video link or telephone in order to help ensure that they have access to the same information as their investor clients.

Widely-attended conferences: Analysts are permitted to attend and speak at widely-attended conferences at which our firm has been invited to present our views. These widely-attended conferences may include investor presentations by corporate clients of the Firm.

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

IIR prohibits research analysts from soliciting or receiving any inducement in respect of their publication of research and restricts certain communications between research analysts and personnel from other business areas within the Firm including management, which might be perceived to result in inappropriate influence on analysts’ views.

Remuneration and other benefits: IIR procedures prohibit analysts from accepting any remuneration or other benefit from an issuer or any other party in respect of the publication of research and from offering or accepting any inducement (including the selective disclosure by an issuer of material information not generally available) for the publication of favourable research. These restrictions do not preclude the acceptance of reasonable hospitality in accordance with the Firm’s general policies on entertainment, gifts and corporate hospitality.

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.

IIR, its officers, employees and its related bodies corporate have not and will not receive, whether directly or indirectly, any commission, fee, benefit or advantage, whether pecuniary or otherwise in connection with making any statements and/or recommendation (if any), contained in this Report. IIR discloses that from time to time it or its officers, employees and related bodies corporate may have an interest in the securities, directly or indirectly, which are the subject of these statements and/or recommendations (if any) and may buy or sell securities in the companies mentioned in this publication; may affect transactions which may not be consistent with the statements and/or recommendations (if any) in this publication; may have directorships in the companies mentioned in this publication; and/or may perform paid services for the companies that are the subject of such statements and/or recommendations (if any). However, under no circumstances has IIR been influenced, either directly or indirectly, in making any statements and/or recommendations (if any) contained in this Report. The information contained in this publication must be read in conjunction with the Legal Notice that can be located at http://www.independentresearch.com.au/Public/Disclaimer.aspx.

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CHARTS

AEG AIQ ALI ARG FOR KBC MFG MXT PE1 RF1 TGF WAA WLE

For more info SHARE ANALYSIS: AEG - ABSOLUTE EQUITY PERFORMANCE FUND LIMITED

For more info SHARE ANALYSIS: AIQ - ALTERNATIVE INVESTMENT TRUST

For more info SHARE ANALYSIS: ALI - ARGO GLOBAL LISTED INFRASTRUCTURE LIMITED

For more info SHARE ANALYSIS: ARG - ARGO INVESTMENTS LIMITED

For more info SHARE ANALYSIS: FOR - FORAGER AUSTRALIAN SHARES FUND

For more info SHARE ANALYSIS: KBC - KEYBRIDGE CAPITAL LIMITED

For more info SHARE ANALYSIS: MFG - MAGELLAN FINANCIAL GROUP LIMITED

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

For more info SHARE ANALYSIS: PE1 - PENGANA PRIVATE EQUITY TRUST

For more info SHARE ANALYSIS: RF1 - REGAL INVESTMENT FUND

For more info SHARE ANALYSIS: TGF - TRIBECA GLOBAL NATURAL RESOURCES LIMITED

For more info SHARE ANALYSIS: WAA - WAM ACTIVE LIMITED

For more info SHARE ANALYSIS: WLE - WAM LEADERS LIMITED