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Australian Ethical’s Smaller Companies Trust participating in a limited number of IPOs

28 Nov 2013
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Australian Ethical outlines its latest investment strategy.

Australian Ethical outlines its latest investment strategy.

Australian Ethical’s Smaller Companies Trust has participated in the frenzy of recent IPO activity on the ASX.

While AE fund manager, Andy Gracey, sees some quality he is also wary of ‘opportunistic’ IPO’s as investment bankers and vendors look to take advantage of the healthy current investor appetite.

“Individual investors need to assess some of the assumptions included in any forward looking forecasts and carefully compare these against listed peers.

It is also worth considering the motives behind the IPO.

“We prefer companies that are listing for strategic and growth considerations and are wary of venders listing for pure financial considerations. We have ignored many IPOs because the future earnings projections appear overly ambitious.

“We are looking to cornerstone drug development company Innate Immunotherapeutics,” said Andy Gracey, portfolio manager, Australian Ethical.  The company (Innate) is mid-stage in clinical development of a multiple sclerosis therapy which has already shown promising early stage results in secondary progressive MS patients.

“We have also invested in Sealink Travel Group which is a tourism and ferry business, operating under the brands of Captain Cook Cruises and Sealink.

“The fund participated in the renewable energy IPO of Meridian Energy IPO, while buying hydro and geothermal generator and energy retailer Mighty River soon after it listed, said Mr Gracey”.

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