Australian Listed Investment Company Report November 2022

This story features PLATINUM CAPITAL LIMITED, and other companies. For more info SHARE ANALYSIS: PMC

Download related file: IIR-Monthly-LMI-Update_1-November-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

Platinum Capital Limited ((PMC)) Announces Capital Management Initiatives

On 25 October 2022, PMC announced that it will be seeking to issue bonus options on a 1-for-4 basis in early 2023 with an exercise price that is designed to take advantage of the depressed level of equity markets. The objective of the options will be to provide shareholders the opportunity to potentially benefit from any subsequent recovery in global equity markets during the option period and potentially improve the liquidity of the Company. The Company also clarified that in relation to the buy-back, the Company will buy back shares when the share price is trading at a discount to pre-tax net tangible asset value (NTA) of more than 20%. The Board believes a discount of this level may be in shareholders’ best interests to buy back shares.

Platinum Asia Investments Limited ((PAI)) Announces Capital Management Initiatives

On 25 October 2022, PAI announced that it will be seeking to issue bonus options on a 1-for-4 basis in early 2023 with an exercise price that is designed to take advantage of the depressed level of equity markets. The objective of the options will be to provide shareholders the opportunity to potentially benefit from any subsequent recovery in global equity markets during the option period and potentially improve the liquidity of the Company. The Company also clarified that in relation to the buy-back, the Company will buy back shares when the share price is trading at a discount to pre-tax NTA of more than 20%. The Board believes a discount of this level may be in shareholders’ best interests to buy back shares.

Argo Global Infrastructure Limited ((ALI)) Raises $21m through SPP

ALI raised $21m through the Share Purchase Plan (SPP) which closed on 14 October 2022. The Company received applications from 1,801 shareholders with 8.9m new shares issued at a price of $2.35 per share. The capital raised will be invested in line with the ALI investment mandate.

Changes to Magellan’s Investment Team

During the month, Magellan Financial Group ((MFG)) announced that David George has been appointed as Chief Investment Officer (CIO) alongside his role as Chief Executive Officer and Managing Director. His appointment to CIO formalises the responsibilities for Magellan’s investment functions that he took on upon his commencement with the company in July 2022. Mr. George will work together with Gerald Stack who has been appointed as Deputy CIO. Mr. Stack leads the team responsible for Magellan’s global infrastructure business. The appointments have enabled Chris Mackay to step back from his oversight role of Magellan’s global equities strategy.

Portfolio Manager Changes at Magellan High Conviction Trust ((MHHT))

On 17 October 2022, MHHT advised that effective from the date of the announcement Nikki Thomas an Alan Pullen have been appointed as co-portfolio managers of the Trust, replacing Chris Wheldon and Michael Poulson.

Ms. Thomas is the co-portfolio manager of Magellan’s global equity strategies. Ms. Thomas originally joined Magellan in January 2007 and was involved in the global equities strategy since its inception in July 2007 until December 2017. Ms. Thomas rejoined Magellan in 2022 after an absence of four years during which time she worked as a global portfolio manager at Aphinity Investment Management.

Mr. Pullen is the Head of the Financials Team, joining Magellan in 2012. Prior to Magellan, Mr. Pullen spent seven years as an analyst and portfolio manager at Maple-Brown Abbott, primarily covering financials in Asia ex-Japan, and he also worked for six years as an economist at the Reserve Bank of Australia.

Fat Prophets Global Property Fund ((FPP)) Seek to Replace the Investment Manager

On 16 September 2022, the Responsible Entity of FPP announced the request for a unitholder meeting to consider a special resolution to terminate the current investment management agreement with Fat Prophets Funds Management Pty Ltd and appoint Lanyon Asset Management Pty Ltd (Lanyon) as the investment manager of the fund and change the name of the fund to the Lanyon Global Fund. The Explanatory Memorandum was released on 7 October 2022 and an Extraordinary General Meeting has been scheduled for 10 November 2022.

Lanyon is the largest shareholder of FPP, owning 31.23% of units on issue and is seeking to replace the current investment manager to restore value for unitholders citing poor performance and lack of confidence in the strategy and the manager. If unitholders vote in favour of the resolutions, the new Manager will seek to amend the investment strategy.

Qualitas Real Estate Income Fund ((QRI)) Amends DRP

In light of the discount that QRI is trading at, QRI announced a revision to the Dividend Reinvestment Plan (DRP). Units issued under the DRP will now be delivered as the lesser of: (a) net asset value (NAV) as at the last day of the calendar month for the distribution period; and (b) the market price of units. Previously, units issued under the DRP were issued at a price equal to the end of month NAV.

Regal Investment Fund ((RF1)) Adds Resources Royalties Fund to Investment Mandate after Liquidity Proposal Approved

On 13 October 2022, RF1 announced that the unitholders of the Gresham Resources Royalties Fund ((GRRF)) voted in favour of the Liquidity Proposal at a recent unitholder meeting.

As detailed in the previous monthly report, the Liquidity Proposal sought to change the name of the fund from the GRRF to the Regal Resources Royalties Fund, appoint Regal as trustee and investment manager, modify the GRRF constitution and replace the information memorandum, terminate the existing investment management agreement and approve the payment of a performance fee to GRRF, among other matters.

Following the approval, the Resources Royalties Strategy has been added to the RF1 investment mandate, with an initial allocation of approximately 17% of RF1’s unaudited NAV as at 14 October 2022.

The Resources Royalties Strategy is the eighth investment strategy to be added to the RF1 investment mandate. The Resources Royalties Strategy aims to provide exposure to a portfolio of natural and renewable resource royalty investments that can provide both income and growth while seeking to minimise some of the downside risks usually associated with investing in mining activities, such as costs and exploration expenditure. The Strategy will seek exposure to a mix of natural and renewable resource royalties, commodity streams and royalty-related products, including listed and unlisted securities, such as equities, warrants, debt and similar instruments.

Plato Income Maximiser ((PL8)) Announces Monthly Dividend of $0.0055 Per Share for December Quarter

During the month, PL8 announced that it will be seeking to maintain a fully franked dividend of $0.0055 per share for the three months in the December 2022 quarter. The Board of PL8 considers that given current economic volatility it is prudent to continue dividends at the current levels in order to manage the Company’s profits reserve and franking credit balances appropriately.

QVE Equities Limited ((QVE)) Increases Dividend Outlook for FY22-23

On 19 October 2022, QVE announced an interim dividend of 1.3 cents per share for the September 2022 quarter, with an ex-dividend date of 15 November 2022 and payment date of 2 December 2022. The dividend represents an 8.3% increase on the June quarter dividend of 1.2 cents per share.

The Company also announced that it seeks to pay dividends totalling 5.2 cents per share for the FY23 period (inclusive of the September quarter dividend), subject to the Company maintaining sufficient profit reserves and there be no material impacts, changes or unforeseen events. The forecast dividend represents an 8.3% increase on the dividends paid for the FY22 period.

Revised Implementation Deed for the Restructure of WCM Global Long Short Limited ((WLS))

On 13 October 2022, WLS announced a revised implementation deed for the Scheme to restructure WLS. Initially, under the restructure proposal, WLS shareholders would exchange their shares for units in a newly registered and unlisted managed investment scheme. After further consideration, the Company has revised the Implementation Deed and under the revised terms, if the Proposed Restructure is approved, WLS shareholders will exchange their shares for units in the WCM Quality Global Growth Fund ((WCMQ)). The number of units received in WCMQ for each WLS share will be based on WLS’s post-tax NTA relative the WCMQ’s end of day NAV immediately prior to implementation.

If approved, upon the implementation of the Proposed Restructure, the WLS portfolio will be liquidated and the cash will be invested in line with the investment strategy of WCMQ, a long only global equity strategy. A General Meeting of WLS shareholders is scheduled for mid-December 2022.

The Company also declared a special dividend of 4.8165 cents per share, fully franked, which was paid on 31 October 2022.

Withdrawal of Merger Proposal for CD1, CD2 and CD3

After announcing a proposal to merge CD1, CD2, CD3 and CD Private Equity Fund IV to form a single fund on 5 October 2022 the Responsible Entity has subsequently withdrawn the merger proposal following feedback from investors.

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.

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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.

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