Paul Moore

PM Capital Global Opportunities Fund (ASX: PGF) and its subsidiary, PM Capital GO 2025 Limited (GO 2025) have jointly issued a Prospectus for the Offer of a next-generation Listed Investment Company (‘LIC’) security: ‘PTrackERS’, which stands for Portfolio Tracking Exchangeable Redeemable Securities (Converting Security).

A first of its kind innovation in the LIC space, PTrackERS have been developed to improve LIC investor outcomes and choice.

The Offer is made via a 1:1 Entitlement to PGF shareholders, plus a General and Broker Firm Offer. The Issue Price is $1.40 per PTrackERS, to raise a minimum of $105 million and a maximum of $491 million.

The Chairman of PGF and GO 2025, Andrew McGill, said: “GO 2025 is unique in the Australian market, combining the skills of an exceptional global equities investment manager, PM Capital, with a highly innovative offer structure that gives investors more control, choice and flexibility.

“PM Capital is in its 20th year of applying its global investing philosophy and process, and has one of the most deeply experienced global equities teams in Australia. In 2017, PM Capital’s global equities strategy applied to funds ranked first for performance in their peer group from 1 year all the way out to 9 years.

“PTrackERS provide access to the management experience of PM Capital, along with a significant benefit – the choice for sellers to redeem in the future based on NTA, thereby providing a redemption safety net if the securities are trading on market at a discount to NTA.

“This is a first of its kind benefit for investors in listed investment companies.

The Chief Investment Officer and Chairman of PM Capital, Paul Moore, said:

“Australians are citizens of the world. Given our outward focus and desire to experience the best the world can offer, it still surprises me that Australians keep such a large proportion of their assets in Australian equities rather than global equities.

“PM Capital GO 2025 provides an efficient and flexible way to take advantage of what we see as the best global opportunities to build wealth – with a long-term perspective.

“We believe our benchmark-unaware philosophy and process suits GO 2025’s aims and structure, allowing us to seek market anomalies that can provide attractive long-term returns.”

GO 2025’s Investment Strategy, and that of its parent PGF, is consistent with that of PM Capital’s unlisted managed investment scheme, the PM Capital Global Companies Fund and other associated global mandates. Across these funds and mandates PM Capital was ranked first in its peer group over 5, 6, 7, 8 and 9 years returns to 31 December 20171.

Since inception the PM Capital Global Companies Fund has doubled the annual returns of the MSCI World Net Total Return Index (AUD)2. PGF’s portfolio, also managed using a consistent global investment strategy, has generated a total return3 of 75% since inception. PM Capital was awarded the Money Management/Lonsec – 2018 Fund Manager of the Year – Equities (Long/ Short category).

GO 2025 is a step forward for LICs

‘GO 2025’ stands for ‘Global Opportunities’, reflecting its focus on global securities, and the year 2025, which is when its ASX-listed securities, the PTrackERS, provide holders the choice to either convert into PGF shares or redeem based on NTA.

The 7 year conversion/ redemption right reflects PM Capital’s recommended investment time frame of seven years plus across its global equities strategies.

It is the first time this type of security has been offer by an LIC.

Major factors which can negatively affect LIC investor returns:

• significant establishment costs resulting in day 1 investable assets being materially below the IPO price;
• even strongly performing LICs can trade away from their underlying net tangible asset (NTA) value, creating uncertainty for investors as to whether they can obtain the underlying value of their securities;
• growth in a LIC’s capital can lead to a dilution of NTA per share for existing holders making NTA performance vary from the investment manager’s performance;
• Locked-up capital creating low alignment between shareholders and the LIC investment manager, and
• Uncertain dividend policy.

PTrackERS by GO 2025 have been designed to address the above concerns. With PTrackERS:

• PM Capital is paying all Offer costs. On day 1, PTrackERS investable assets will equal the Issue Price (NTA will not include any soft intangible receivables from the investment manager. This is extremely rare with LICs);
• a selling holder has the choice of selling on market or redeeming based on NTA on 30 June 2025. This feature should also act as a catalyst for PTrackERS to trade closer to NTA;
• PTrackERS are non-dilutive to NTA before tax plus franking credits for both PGF and GO2025;
• other LICs lock-up capital, whereas PTrackERS gives investors the choice in 7-years’ time to redeem or stay. This makes the investment manager truly aligned and accountable for investment performance and communication, and
• a clear dividend policy that intends to target a distribution yield of between 3% and 4% per annum.

With PTrackERS the benefits of traditional LICs outlined below remain:

• PTrackERS will be traded on the ASX (Code: P25PA) consistent with shares of LICs;
• the Investment Manager can, due to the seven year time frame, genuinely invest for the long term without the distraction of daily capital flows, and
• dividends can be franked where franking credits are available.

Higher levels of alignment between investors and the Investment Manager

PM Capital is strongly aligned to the GO 2025 and PGF investment strategy:

• The Investment Manager, PM Capital, and its staff are, in aggregate, the largest holders in GO 2025’s parent, PGF, with a co-investment representing approximately 8.9% of PGF’s issued capital (amounting to an investment of over $40 million);
• If the Offer is fully subscribed, PM Capital will be required to pay approximately $15 million in fees and costs on behalf of the Issuers; and
• If investors do not believe they have had a good investment experience, they can redeem PTrackERS on 30 June 2025, and in doing so remove a source of PM Capital’s management fees revenue.

Broker Syndicate

Morgans Financial Limited is the Lead Arranger and Joint Lead Manager to the Offer. Morgan Stanley Australia Securities Limited and Ord Minnett Limited are the other Joint Lead Managers.

The Co-Managers to the Offer include Baillieu Holst Limited, Bell Potter Securities Limited, Kimber Capital Pty Ltd, Patersons Securities Limited, and Shaw and Partners Limited.

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Mr McGill currently serves as Non-Executive Director of the PM Capital Asian Opportunities Fund and Non-Executive Chairman of the PM Capital Global Opportunities Fund. He formerly served as the Managing Director and Chief Executive Officer (CEO) of ASX-listed investment company Treasury Group.

He was the Founding Partner with Crescent Capital Partners and former Managing Director and CEO of the private equity firm Northern Lights Capital Group.

“We are delighted to welcome Mr McGill to the company. Countplus will benefit from Mr McGill’s extensive merger and acquisitions (M&A) expertise and draw upon his deep capital markets and private equity experience as Countplus continues with its two-year turnaround strategy,” said Countplus CEO Matthew Rowe.

“As part of this strategy, we have put together a refreshed and skilled Board and Mr McGill’s experience in managing leading companies will be invaluable to Countplus as we form a more disciplined and profitable financial services company,” Mr Rowe said.

Mr McGill has also been appointed as Chair of the Acquisitions Committee.

“As part of Countplus’ revitalisation strategy, the company has adopted a new Direct Equity Plan (DEP), designed to align Countplus’ strategic goals with member firms and improve performance. In line with this, the company has created a strong pipeline of M&A opportunity. In this environment, Mr McGill’s chairmanship of the Acquisitions Committee will be greatly valued by Countplus,” Mr Rowe said.

Mr McGill holds a Bachelor of Commerce and Bachelor of Laws from the University of New South Wales and is a council member at Kambala, a Sydney-based Anglican School for Girls.

Mr McGill holds a Graduate Diploma in Applied Finance and Investment, Banking, Corporate, Finance and Securities Law from the Financial Services Institute of Australasia.

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TRG has acquired a 20% equity stake in Octis with an option to increase that by a further 10% if hurdles linked to new funds flow are satisfied. Funding of the acquisition was from working capital and the strike price of the option is correlated to the prevailing net asset backing at the time the options are exercised. The initial acquisition price for the 20% stake was approximately $224,000.

Founded in 2007, Octis is an Asian multi strategy equity manager based in Singapore. The investment team, headed by CEO Jerome Ferracci who has 27 years of experience, has achieved an outstanding track record with +22% net returns since inception against – 21% for the MSCI Asia Pacific index (as at 31/05/2012).

“We have been interested in diversifying into alternatives and have been actively searching for opportunities. We are very pleased about partnering with a quality business that offers access to Asia with low volatility. We look forward to assisting in the growth of Octis both in Australia and overseas,” said Andrew McGill, Treasury Group Chief Executive Officer.

“We have been very impressed by TRG’s performance in partnering boutique fund managers, and are very confident of the synergies created with our partnership. On one hand TRG has a proven outstanding track record in terms of product development and distribution, whilst on the other hand we strongly believe in our capability of bringing significant value to investors by mastering equity risk at a low level of volatility through our alternative investment products,” said Jerome Ferracci.

11 July 2012 

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