Spheria launches new LIC
Spheria Emerging Companies (SEC) has launched its initial public offering (IPO) for a listed investment company (LIC) which will offer investors access to a small and micro cap portfolio of Australian and New Zealand companies.
The offer, which was expected to raise up to $250 million, comprised 125,000,000 fully paid ordinary shares in SEC at an application price of two dollars per share, with no over subscriptions.
The company said its objective would be to maximise total shareholder return via a combination of capital growth and income, with the aim of regularly paying fully franked dividends to shareholders.
The new LIC would be managed by Spheria Asset Management’s small and micro cap investment team including Matthew Booker, Marcus Burns and Adam Lund.
The investment process would be aimed to identify “high quality, relatively low risk, small and micro cap companies that have been assessed as being able to generate sustainable free cash flows through the business cycle.”
The markets were often inefficient when pricing small and micro cap stocks which were traditionally under-represented in Australian retail investors’ portfolios, the company said.
Matt Dell, distribution director at Pinnacle Investment Management, said: “There’s clearly demand for the [LIC] structure from retail investors.
“We generally offer a managed fund and a liquid equivalent within the same strategy so it’s about just giving choice but there’s clearly demand for this.”
According to the company, the market would also see a major shift in a size of an average LIC in favour to investors and while a general number of LICs was expected to go down, the market would see new LICs which would be much larger.
SEC also managed to earn a “highly recommended” rating from Lonsec due to “the manager’s pedigree navigating investment opportunities in the higher risk small and micro cap investment universe.”
Spheria also manages the Spheria Australia Smaller Companies Fund, which generated 11.7 per cent per annum return since inception (net of fees) to September 30, 2017.
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