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Evans & Partners promise access to global disruption

ETF Watch - Jul 13, 2017

Boutique fund manager Evans & Partners are currently raising up to $150m for their new Listed Investment Trust, the Evans & Partners Global Disruption Fund (EGD). The offer is open until 18 July.

What is the strategy?

The fund will target a concentrated portfolio of companies that exhibit some or all of the following characteristics:

  • a proven ability to disrupt, and the potential to continue to disrupt, existing markets and businesses;
  • the ability to utilise new technology to disrupt existing industries;
  • demonstrated growth potential and scalability; and
  • an appropriate capital structure to fund research and development, as well as growth.

The fund may also target pre-IPO companies, however the majority of investment will be within listed companies who are in a position to 'disrupt'. The fund targets cash holdings between 2-50%.

What does this mean?

We've all heard the stories of disruption from the last few years. Think of what Uber has done to the taxi industry, AirBnB to Hotels, what the iPhone did to phone manufactures and what many predict Amazon will do to retailers. As technology becomes more powerful and accessible, it can only be assumed that there will be more old world industries open for disruption. Think banking, energy, health care and utilities. These are huge industries that are likely to face disruption of some sort. EGD is aiming to capitalise on this.

Who is behind Evans & Partners

Evans & Partners (the investment manager) is a boutique fund manager, managing around $1b of assets. The responsible entity of the fund is Walsh & Company, a fund manager managing around $3b of assets and responsible for existing LIC Emerging Markets Masters Fund. Evans & Partners have put together a star studded lineup of disruption and business leaders within their investment committee, including:

  • David Thodey - CSIRO chairman and former Telstra CEO;
  • Richard Goyder - Managing Director of Wesfarmers;
  • Paul Basset - Co-founder of Seek and venture capitalist;
  • Sally Herman - Director of Suncorp group;
  • Jeffrey Cole - Research professor and director of the Digital Future at USC Annenberg.

Listed Investment Trust Structure

The fund will be listed as a Listed Investment Trust (LIT), compared to the more common Listed Investment Company (LIC) structure. We looked at the two structures when Forager Australian Shares listed last year, with the key difference being the trust structure must pay out all earnings to investors, whereas a company is able to retain earnings, and therefore provide a more consistent income stream to investors.

Details of the Offer

Breaking from the usual LIC IPO process, there’s no ‘free’ options associated with the offer. WIth an issue price of $1.60 and a day 1 expected Net Asset Value (NAV) of $1.55, investors in the IPO will be coughing up 5 cents per share in the IPO costs and will be hoping for the fund to be popular enough to support the issue price.

Management costs of the fund will be 1.55% per annum (plus GST). No performance fees apply.

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IPO Facts

  • Minimum raise of $50m
  • Maximum of $150m
  • $1.60 issue price
  • Offer open date: 26 June 2017
  • General Offer expected to close: 18 July 2017
  • Expected trading on the ASX: 31 July 2017

This post was prepared with publicly available information available from Evans & Partners. ETF Watch did not receive any payment from Evans & Partners for this post.

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