Listed managed investments - NBI to return capital, Barings to acquire Gryphon Capital Partners

April 06, 2023 08:29

Independent Investment Research

During the month of March there was a lot of activity in the LMI market with a number of LICs and LITs raising capital through Placements and Share Purchase Plans (SPPs) and some portfolios being impacted by the US banking crisis. Some of the key news items for the month include:

NBI to Return Capital through Increased Distribution: On 14 March 2023, NB Global Corporate Income Trust (ASX: NBI) announced a 71.6% increase in the monthly distribution from 0.711 cents per unit to 1.22 cents per unit, effective 1 March 2023. The new monthly distribution represents an annualised distribution of 14.6 cents per unit versus the prior annualised amount of 8.5 cents per unit. The distribution will include both an income and capital component with the capital component representing a return of capital. The return of capital seeks to enhance the Trust’s competitiveness and increase the demand for units on the ASX and narrow the discount to NAV at which the Trust has been trading. The Trust expects the higher distribution rate will continue until 30 June 2024, at which point the distribution rate will be reviewed and potentially revised. The new distribution rate represents a distribution yield of 10.35% based on the market price at 31 March of $1.41, with the Trust trading at a 14% discount based on the market price at 31 March 2023 and the NAV as at 30 March 2023. Given the return of capital the Trust did not renew the unit buyback program.

PIA takes a Hit on US Banking Crisis: Pengana International Equities Limited’s (ASX: PIA) share price hit 2 year lows during March with the portfolio having exposure to Silicon Valley Bank (SVB) and First Republic Bank (FRB). SVB went into receivership during the month with FRB also getting caught up in the banking crisis with the share price falling by almost 90% over the month of March. PIA had a total exposure to the two banks of ~4%, therefore the exposure to the declines in the two stocks was limited. In an announcement to the market, the Company stated the investment team continue to monitor the position in FRB.

Barings to Acquire Gryphon Capital Partners Pty Ltd: On 15 March 2023, Gryphon Capital Income Trust (ASX: GCI) announced that Barings entered into a definitive agreement to acquire 100% of the owner of the Manager of the portfolio, Gryphon Capital Partners Pty Ltd (Gryphon). Gryphon will join the Barings Global Structured Finance team, which had US$8.2 billion AUM prior to the acquisition. There will be no changes to the management of the GCI portfolio with the portfolio continuing to be managed Steven Fleming and Ashley Burtenshaw.

CD1, CD2 & CD3 Looking to for A New Responsible Entity: The Responsible Entity (RE) of CD1, CD2 and CD3, E&P Investments Limited (E&P), announced it has commenced a process to seek proposals for an external third party RE to replace E&P. The decision provides the opportunity for unitholders to elect a RE for the Funds that is independent of the Investment Manager. The decision comes after feedback from investors as well as the broader E&P Financial Group Limited’s stated strategic objective of exiting from non-core businesses.

PGF Raises $28.06m through SPP: The Share Purchase Plan (SPP) offered by PM Capital Global Opportunities Fund Limited (ASX: PGF) closed during the month. The Company raised $28.06m through the SPP, issuing 16.0m new shares at a price of $1.7489. The issue price represented a 2% discount to the volume-weighted average price of shares over the 5 trading days to 8 February. The shares issued under the SPP will be eligible for the interim dividend of 5 cents per share, fully franked, scheduled to be paid on 13 April.

TGF Entitlement Offer Falls Short: In February 2023, Tribeca Global Natural Resources Fund (ASX: TGF) announced it was seeking to raise up to $51.7m through a Wholesale Placement and a 1-for-4 Entitlement Offer. The Wholesale Placement was successfully completed raising $19.37m. Applications for the Entitlement Offer opened on 3 March 2023 with the close date extended to 31 March 2023. New shares under the Placement and the Entitlement Offer have been issued at $2.10, a substantial discount to the pre and post tax NTA at the time of the announcement and a discount to the share price at the time of the announcement. TGF have announced the Entitlement Offer, including the Top-Up Facility and Shortfall Facility, raised a total of $16.0m, with the majority of the capital raised through the Shortfall Facility. Combined with the Wholesale Placement, a total of 16.9m new shares will be issued, increasing the shares on issue by ~27%. TGF shares finished the month trading at $2.06, falling 8.4% from the date of the capital raising announcement.

BTI Makes Follow-on Investment in InstantScripts: On 15 March 2023, Bailador Technology Investments Limited (ASX: BTI) announced it had completed a $10m follow-on investment in InstantScripts. InstantScripts in a digital healthcare platform that enables Australians to conveniently access high quality doctor care and routine prescription medication in a safe, secure and clinically responsible manner. BTI’s investment was accompanied by an investment from a third party institutional investor. The investment round resulted in a 30% uplift to BTI’s existing $24.4m investment. The follow-on investment confirms the positive outlook the Manager has on the company. BTI still has a substantial amount of cash available to deploy after the large cash inflow realised from Instaclustr being acquired by NetApp last year.

For all the news and latest performance data, see the attached report.