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Wilson goes international with WAM Global Limited (WGB)

ETF Watch - Apr 24, 2018

It was only a matter of time until it happened. Poster boy of the Australian LIC landscape, Geoff Wilson and his team at Wilson Asset Management (WAM) are joining the increasing popular Global Listed Investment Company (LIC) space with their latest IPO, WAM Global Limited (WGB). The IPO is expected to open on 1 May 2018 and close on 8 June 2018, raising up to a total of $550m.

This will be WAM’s 7th LIC, making them the manager with the most LICs on the ASX. With their LICs approaching $3 Billion in market capitalisation, the addition of WGB will see WAM managing around 10% of all ASX listed LIC capital.

With their loyal army of shareholders, and a $150m priority offer available to them, we have no doubt WAM Global Limited will be popular and would not be surprise to see it fully subscribed, as has been the case with their last couple of IPOs.

What is the investment approach?

According to the prospectus, the company will invest in line with four broad principles:

  • Focus on listed global securities – specifically undervalued growth companies.
  • Preference for undervalued companies – where the shares are trading below Wilson Asset Management’s valuation.
  • Portfolio based and index unaware investing – diversification across difference global markets and sectors, with investments selected on a case by case basis.
  • Capital preservation – the company will hold cash unless it can identify appropriate investment opportunities.

Additionally, WGB plans to hold a reasonably large portfolio of between 40-80 companies, with most positions of between 1-5% of the total portfolio. The portfolio will predominately be comprised of companies listed in developed markets.

Whilst short selling and the use of derivatives are permitted, they are not expected to account for material components of the portfolio.

WAM’s signature Research and Market driven approach

All of WAM’s funds employ at least one of two of Wilson’s Research and Market driven approaches. This includes their signature funds WAM Capital and WAM Leaders.

WGB is no different, and will include both approaches, summarised below:

  • Research driven – Longer term, looking for quality undervalued companies.
  • Market driven – Shorter term, looking for short term mis-pricing, arbitrage and trading opportunities.

Pages 28-30 of the prospectus provides more information on the Research and Market driven approaches.

Who is the manager?

Wilson Asset Management’s history likely requires little introduction. As mentioned earlier, this is their 7th LIC and will result in them managing around $3.5 Billion in assets. It is however their first foray into international equities. WAM have appointed experienced global equities manager Catriona Burns to lead management of the portfolio. Burns started her career with WAM, before working for Hunter Hall and Airlie Funds Management.

What else exists in this space?

There’s 25 global focused LICs available on the ASX, meaning options for investors are certainly not limited. Some of the larger LICs available include last year’s monster Magellan listing - MGG, Platinum Capital, VGI Global and the WAM administered charitable fund, Future Generation Global Investments.

Investors in WAM Global are clearly investing to access the WAM strategy, rather than access a market underserved by the current offerings.

Details of the Offer

Geoff Wilson has stated that $550m is a hard maximum for WGB. This is not a huge listing based on the size of some of the recent offerings, so we would not be surprised to see this maximum hit. We are unsure if the offer will close early if fully subscribed or if subscriptions will be scaled back. As a result we suggest investors wanting to participate get in early.

WAM will be funding all listing costs, a strategy that has been common for the last 6 months or so and has coincided with increased demand for LIC IPOs. This means no ‘bonus options’ will apply.

WGB will have an issue price of $2.20. Management costs of 1.25% pa apply, with performance fees of 20%  of outperformance beyond the MSCI World Index Net (AUD) benchmark applying.

Quck Links:

IPO Facts

  • Minimum raise of $16.5m
  • Maximum raise of $550m (including $220m oversubscription)
  • $2.20 issue price.
  • Expected offer open date: 1 May 2018
  • General offer expected to close: 8 June 2018
  • Expected trading on the ASX: 22 June 2018.

This post was prepared with publicly available information available from Wilson Asset Management. ETF Watch did not receive any payment from WAM for this post.

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