Australian Listed Investment Company Report – July 21

This story features WASHINGTON H. SOUL PATTINSON AND CO. LIMITED, and other companies. For more info SHARE ANALYSIS: SOL

Download related file: Monthly-LMI-Update_1-July-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

FuturePay (Managed Fund) Lists on Chi-X

FuturePay (Managed Fund) (Chi-X: FPAY) commenced trading on 2 June 2021. FPAY seeks to provide investors predictable, monthly distributions that grow with inflation, with the potential for capital growth and protection in down markets. The Fund is managed by Magellan Asset Management and seeks to achieve its objective through an investment in a portfolio of securities that replicate a blend of the Magellan Global Plus strategy (50%- 60%) and the Magellan Core Infrastructure strategy (40%-50%), in combination with a reserving strategy whereby cash will be directed to a discretionary trust (“Support Trust”) to support distribution payments if the portfolio performance is insufficient to meet the distribution requirements in any given period.

FPAY employs the Single Unit (dual registry) structure and therefore units can be purchased on-market through the Chi-X exchange or through a direct application with the Responsible Entity.

MLT & WHSP Propose Merger

Milton Corporation Limited ((MLT)) has entered into a Scheme Implementation Agreement with Washington H. Soul Pattinson and Company Limited ((SOL)) under which WHSP will acquire 100% of the share capital in MLT that it does not already own by way of a Scheme of Arrangement. MLT shareholders will receive WHSP scrip as consideration with MLT shares to be valued at a 10% premium to the pre-tax NTA, adjusted for the proposed final and special dividends, which include (i) a fully franked special dividend of up to 37 cents per share; (ii) a fully franked final dividend (estimated to be 8 cents per share); and (iii) for shareholders that remain at the time of the WHSP dividend payment, the FY21 fully franked dividend of WHSP (estimated to be 7 cents per share based on the proposed exchange ratio). The offer represents $6.00 per MLT share, which was a significant premium to the share price at the time of the announcement.

MLT shareholders will be asked to vote on the scheme at a meeting in mid-September.

No Legal Action to be taken by ASIC Against Regal & Estimated Final Distribution Announced

On 16 June 2020, Regal Investment Fund ((RF1)) announced that Regal Funds Management received a formal” no-action” letter from ASIC stating no enforcement action will be taken at this time. This comes 18 months after Regal first learnt that ASIC was conducting an investigation into the Manager regarding the trading of certain securities by the Manager and its representatives. This was a pleasing result for RF1 shareholders.

RF1 also announced an estimated final distribution of $0.75 per unit on the back of outsized performance over the past 12 months. The Fund has a DRP available to unitholders. The DRP price will consider the relationship between the prevailing market price of RF1 units and the NAV. Where the market price is higher than the NAV, the DRP price will be at the NAV. Where the market price is lower than the NAV, the DRP price will be based on the market price.

Monash Absolute Active Trust (Hedge Fund) Commences

Trading

Monash Absolute Active Trust (Hedge Fund) ((MAAT)) commenced trading on 10 June 2020. The Fund was restructured from a LIC to an ETMF. The Fund commenced trading with 45.2m units on issue with a value of $1.0062. All MAAT unitholders at the time of the restructure were issued units in MAAT equal to the number of shares held in MA1 and retained their shareholding in MA1, which was delisted from the ASX on 1 June 2021 and is currently trading as an unlisted company. As at 31 May 2021, the NTA of MA1 was $0.2425. Therefore the combined value at the commencement of trading was $1.2487 per unit.

MAAT declared its inaugural quarterly distribution on 24 June 2020 of 1.6 cents per unit.

Mary Manning Departs EAI & Board to Explore Options to Narrow Discount

The Portfolio Manager of Ellerston Asian Investments Limited ((EAI)), Mary Manning resigned in June. Fredy Hah has taken on the role of Portfolio Manager. Fredy has been the Deputy Portfolio Manager of EAI’s portfolio since joining the Manager in April 2017.

The Board are seeking to reduce or eliminate the discount at which the Company is trading to deliver to those shareholders who desire liquidity at a price more closely approximate to the asset value of the portfolio with a clear pathway to redeem their investment at NTA, while providing other shareholders the ability to remain invested. In the event the discount persists in 2022, the Board will consider its options to realise this.

WGB and TGG Announce Merger

WAM Global Limited ((WGB)) and Templeton Global Growth Fund Limited ((TGG)) have entered into a Scheme Implementation Agreement to merge the two companies.

Under the Agreement WGB will acquire 100% of the TGG shares that it does not already own. TGG shareholders will receive WGB shares and options, based on the relative NTA per share of WGB and TGG. TGG has also agreed to offer to buy-back shares in TGG at NTA (after all current and deferred taxes and associated transaction costs), providing TGG shareholders a cash alternative to the WGB scrip consideration.

TGG shareholders will be given the opportunity to vote on the proposal at a meeting to be held in September 2021.

WAM Strategic Value Limited ((WAR)) to List on 28 June 2021

WAR is set to list on the ASX on 28 June 2021 after investor demand exceeded the maximum subscription amount of $225m. According to the Prospectus, no oversubscriptions will be accepted so the Company is expected to list with 180m shares on issue at $1.25 per share.

NBI Announces FY22 Target Distribution & Vivek Bommi Departs

On 17 June 2021, NB Global Corporate Income Trust ((NBI)) announced a target distribution for FY22 of 4.75%p.a (net of fees and expenses). This is an increase from the FY21 target distribution of 4.5%p.a.

Vivek Bommi, a Portfolio Manager focused on Global and European Non-Investment Grade portfolios within the Global Non-Investment Grade Fixed Income team has resigned. Vivek’s responsibilities will be absorbed by existing team members. We note the Global Non-Investment Grade Fixed Income team of the Manager is sizable with 50+ investment professionals and is part of the broader Neuberger Berman Fixed Income platform with more than 170 investment professionals globally.

SNC Announces Increased Dividends

Sandon Capital Investments Limited ((SNC)) announced their intention to pay a fully franked final dividend for FY21 of 2.75 cents per share, a 10% increase on the previous final dividend. The Board also announced the Company anticipates paying a FY22 interim dividend of a similar amount, subject to profit reserves, franking credits and it is within prudent business practice to do so. Based on the current profits reserve and franking credit balance, the Company has 5 years of fully franked dividend coverage, assuming an annual dividend of 5.5 cents per share.

CAM Release Dividend Guidance for September Quarter of No Less Than 1.265 cents per share

Clime Capital Ltd ((CAM))  released dividend guidance for the September quarter with a dividend of no less than 1.265 cents per share declared. The dividend represents at least a 1.2% increase on the 1.25 cents per share dividend declared for the June quarter and a 12.4% increase on the September quarter dividend in the previous year.

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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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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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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