Australian Listed Investment Company Report September 2022

Australia | Sep 05 2022

This story features METRICS INCOME OPPORTUNITIES TRUST, and other companies. For more info SHARE ANALYSIS: MOT

Download related file: IIR-Monthly-LMI-Update_1-September-2022

LMI Market News

IIR Initiates Coverage on Metrics Income Opportunities Trust

Metrics Income Opportunities Trust ((MOT)) listed in April 2019 raising $300m through the issue of 150m units at a price of $2.00 per unit. The Trust is managed by Metrics Credit Partners (MCP) and is the second LIT issued and managed by MCP, the first LIT being Metrics Master Income Trust ((MXT)).

MOT provides exposure to a portfolio of private credit investments. It does so through an investment in and alongside four wholesale funds managed by MCP, with the Trust seeking to provide exposure to the full spectrum of private credit investments. The Trust is mostly exposed to loans, however may also provide investors with the potential for upside gains through exposure to private equity and equity-like securities. The portfolio will be exposed to low investment grade and sub-investment grade loans (BBB to Not Rated), with the portfolio historically having a focus on sub-investment grade exposure. The portfolio is positioned to provide exposure to the higher-end of the risk spectrum in private credit. This is reflected in the enhanced target cash distribution of the Trust of 7.0%p.a. The Trust has a target total return of 8%-10%p.a., which reflects the potential for capital gains as well as income with the Trust having the mandate to invest in private equity and equity-like securities in addition to loans.

IIR assigned a Recommended rating to MOT. MOT is intended to provide a higher risk/return profile to that of MXT to provide those investors with a greater risk appetite access to an enhanced income. The portfolio has historically had a focus on sub-investment grade loans and therefore entails the additional default risk associated with these companies. Investors should be mindful that defaults generally tend to cluster during periods of prolonged economic weakness. MOT has not met its cash distribution target in recent times with declining interest rates resulting in the Trust not being able to achieve the fixed rate target. We expect the increasing interest rate environment will assist with achieving this objective more regularly moving forward.

To view the full report please visit the IIR website (www.

Earnings Season Wraps Up

The news headlines in August were dominated by results releases with the FY22 results period wrapping up at August-end. Volatility in the market, particularly the 2H’FY22, was a drag on portfolio performance and impacted earnings for a number of LICs. From an income perspective, it was a positive for shareholders with 84% of LICs declaring a final dividend in line or greater than the previous year (not including special dividends). We will be releasing a full earnings wrap up in the coming weeks.

EAI Assessing its Options

In it’s FY22 results released on 30 August 2022, Ellerston Asian Investments Limited ((EAI)) reiterated that the Board is seeking to materially reduce the discount and are seeking to deliver to those shareholders who desire liquidity at a price more closely approximate to the underlying asset value, a clear pathway to redeem at NTA (net tangible asset value) while also providing other shareholders the option to remain invested in the strategy. The Company will provide an update on the various alternatives that the Board has been examining and the proposed next steps at the upcoming AGM.

Alternatives are being considered primarily because of the consistent discount that EAI as traded at throughout its history, as shown by the below chart. The Company has implemented a buyback program and resolved to pay a regular fully franked semi-annual dividend, which the Company has done since 2018.

No Dividend for Tribeca Global Natural Resource Limited ((TGF))

After a strong 1H’FY22 which provided hope for the Company to pay a maiden dividend for the FY22 period, market weakness in the 2H’FY22 resulted in the Company reporting a loss of $11.8m and not declaring a dividend for the period. It remains the Company’s intention to pay a dividend at a time when the Company is in a position to do so.

Djerriwarrh Investments Limited ((DJW)) Raises $63.5m

On 23 August 2022, DJW announced the results of a Share Purchase Plan (SPP) that was announced earlier in the month. There were applications from 20.8% of eligible shareholders, with the Company raising $63.5m through the issue of new shares at $2.78 per share.

Diversified United Investment Limited ((DUI)) Announces Share Purchase Plan

On 18 August 2022, DUI announced a Share Purchase Plan (SPP). Eligible shareholders are able to purchase up to $30,000 of new fully paid ordinary shares in DUI. Shares will be issued at the lower of:

-$4.69 – a 3% discount to the closing DUI price on the day prior to the announcement, adjusted for the final FY22 dividend; or

-The VWAP of the DUI price over the last five trading days of the SPP offer period.

The closing date of the SPP offer is scheduled for 26 September 2022 with shares scheduled to be issued on 30 September 2022. Participants in the offer will not be entitled to the final FY22 dividend.

The capital raised will be used to invest in DUI’s portfolio.

VG1 Updates Dividend Policy

During the month, VGI Partners Global Investments ((VG1)) announced that the Company is amending its dividend policy. The Company previously had a target dividend yield of 4%p.a. calculated with reference to the share price. The Company will now seek to pay dividends on a semi-annual basis with the payment of at least 4.5 cents per share per half-year period. The Board intends for dividends to be franked to the fullest extent possible and will seek to grow the dividend payment over time. After adjusting for the final FY22 dividend, the Company has 55.3 cents per share in the profits reserve, providing over 6 years of dividend coverage for a 9 cents per share full year dividend payment, subject to the Company having sufficient franking credits.

The change in the dividend policy comes after a steep decline in the VG1 share price over the FY22 period. The continuation of the target dividend policy based on the share price would have resulted in significant dividend volatility. The amended dividend policy provides a level of dividend stability for shareholders.

VG8 Updates Dividend Policy

During the month, VGI Partners Asian Investments ((VG8)) announced that it had amended its dividend policy. The Company previously had a target dividend yield of 4%p.a. calculated by reference to the VG8 share price. The Company will now being seeking to maintain a semi-annual dividend of 5 cents per share and grow this over time. The Company will seek to frank dividends to the fullest extent possible.

The change in the dividend policy comes after declines in both the NTA and share price over the FY22 period. The continuation of the target dividend policy based on the share price would have resulted in significant dividend volatility. The amended dividend policy provides a level of dividend stability for shareholders.

PGF Provides Dividend Guidance

On 11 August 2022, PM Capital Global Opportunities Fund Limited ((PGF)) announced it intends to maintain a minimum semi-annual dividend payment of 5 cents per share going forward, subject to there being no material changes in market conditions and the performance of the portfolio.

The dividend guidance is consistent with the dividend guidance provided for FY22 of a full year dividend at least 10 cents per share, which the Company delivered.

The Company provides an attractive dividend yield based on the FY22 dividend and the dividend guidance.

Scheme Meeting for WLE Merger with AEG Scheduled for 15 September 2022

The Scheme meeting to consider and vote on the merger of Absolute Equity Performance Fund Limited ((AEG)) and WAM Leaders Limited ((WLE)) is scheduled for 15 September 2022 after the courts approved the convening of the meeting during the month.

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 NTA of the two companies on the Calculation Date.

If the Scheme is approved and becomes effective the following will occur:

-AEG shares will be exchanged for WLE shares on the Implementation Date. The number of WLE shares issued for each AEG share will be based on the relative pre-tax NTA of AEG and WLE on the Calculation Date;

-AEG will become wholly owned by WLE and AEG will be delisted from the ASX; and

-The business day after the Implementation Date, AEG shareholders in their new capacity as WLE shareholders will be able to trade their WLE shares.

There will be no cash consideration offered as part of the Scheme. AEG shareholders who do not wish to participate in the Scheme may sell their shares on market prior to the Effective Date (22 September 2022). The market price received may be more or less than the implied value of the Scheme.

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.

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.


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.


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.


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.


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

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