Listed managed investments: Are you doubling down on Aussie large caps?

In this edition of the IIR LMI monthly update, we take a look at whether Australian large cap listed investment companies offer a level of diversification or whether investors are doubling down on their stock exposure in the event multiple Australian large cap LICs are owned. In the report, we take a look at the overlap of stocks of nine Australian large cap LICs.   

Some of the key news items include:

• Loomis Sayles Global Equity Fund (Quoted Managed Fund) lists: Loomis Sayles Global Equity Fund (Quoted Managed Fund) (ASX: LSGE) listed on the ASX on 1 October 2021. LSGE provides exposure to the Loomis Sayles Global Equity Opportunities Strategy, which was established in October 2004. The responsible entity is Investors Mutual Limited, which has appointed Loomis Sayles as investment manager. Loomis Sayles is a global asset manager that was established in 1926 and had over US$350 billion in assets under management as at 30 June 2021 across fixed income and equity investment mandates. The fund has a long-only investment strategy with a fundamental bottom-up investment approach. The portfolio represents the best ideas of the investment team. The fund seeks to deliver a return (after fees and expenses but before taxes) in excess of the benchmark (MSCI All Country World Index) over a full market cycle, which is considered to be 3-5 years. 
• Regal Investment Fund (ASX: RF1) Raises $212m: On 6 October 2021, RF1 announced it was conducting a placement and accelerated entitlement offer to institutional and wholesale investors and a general entitlement offer to eligible unitholders. Combined, the fund was seeking to raise up to $212 million. RF1 completed the placement and entitlement offers during the month, raising $212 million. All units issued under the placement and entitlement offers were issued at a price of $3.79 per unit, representing the net asset value of the fund at 1 October 2021 and a substantial discount to the unit price at the time the capital raising was announced. Capital raised under the offer will be allocated to existing strategies in line with the fund’s investment objective with the aim of further diversifying RF1’s portfolio across both private and public alternative investments. The manager is covering all fees and expenses associated with the offer.
• Qualitas Real Estate Income Fund (ASX:QRI) Raises $171.6m: On 7 October 2021, QRI announced they were seeking to raise up to $214 million through a 1-for-2 pro-rata non-renounceable entitlement offer to eligible unitholders and a shortfall offer to new investors at an offer price of $1.60 per unit. There was strong demand for the offer with QRI raising $171.6m. The raise takes the total capital of the trust to $599.6m. The capital raised will be invested as per the investment strategy of the trust, with the raising providing unitholders the benefits of greater liquidity and portfolio diversification. The manager will waive its management fee with respect to any uninvested capital raised from the entitlement offer, ensuring unitholders are not paying fees on idle capital. We view this as a significant positive for unitholders.
• Cadence Opportunities Fund Seeks to List: Applications are open for investment in the Cadence Opportunities Fund (expected ASX code: CDO) with the company seeking to raise
  up to $52m. The offer closes on 3 November 2021. CDO has been operating as an unlisted investment company since January 2019 after the first attempt at an IPO fell short. Shares in the company will be issued at the mid-point of the pre-tax and post-tax NTA at 31
  October 2021.
  
• Clime Capital Limited (ASX: CAM) Seeks to Restructure Convertible Notes: CAM is seeking to restructure the Convertible Notes (ASX: CAMG), which are set to mature on 30 November 2021. On 28 October 2021, the company issued a prospectus regarding the restructure offer and intends to offer up to $35m new notes with a face value of $1.00 per Note. The company intends to have no more than $35m notes on issue following the completion of the offer. The company will be seeking approval of the restructure proposal
  at the AGM on 18 November 2021. 
• Bailador Technology Investments Limited (ASX: BTI): SiteMinder Lodged Prospectus for IPO: In October, BTI announced that SiteMinder has lodged a prospectus for its proposed IPO on the ASX. SiteMinder shares will have an issue price of $5.06 per share and an enterprise value of $1.3 billion upon listing. BTI confirmed that it was able to secure a priority allocation in the IPO for current BTI shareholders. its shareholding in SiteMinder following the proposed IPO. BTI has entered into an agreement to realise a minority portfolio of its investment in SiteMinder for a total of $15.1 million in cash. BTI is committing to not selling any of its remaining $84.6 million investment in SiteMinder until at least the date of SiteMinder’s full year results release for 2021-22, pursuant to a voluntary escrow agreement. SiteMinder is the largest holding in the BTI portfolio with a value of $82.5 million as at 30 September 2021. As detailed in an announcement on 18 October 2021, the valuation for the proposed IPO implies a valuation of $99.6 million for BTI’s holding. The implied valuation represents a $17.1 million uplift (21%) to BTI’s current carrying value of SiteMinder. The valuation represents a multiple of 22.7 times investment costs on BTI’s investment in SiteMinder.

See all the details in the attached report. Please note the attachment has been updated due to some incorrect figures in the overlap analysis table in the original upload. Apologies for any inconvenience.