Perpetual’s IPO indicative of the strong demand for cross border trustee services.

The Initial Public Offer (IPO) of the Frasers Hospitality Trust in Singapore on Monday was indicative of the strong demand for cross border trustee services in the region, according to Perpetual.

Listed on the Singapore Stock Exchange on 14 July 2014, Perpetual Corporate Trust is the trustee for the newly listed Singapore real estate investment trust (REIT) and also trustee for the assets that the REIT holds in Australia – the Novotel Rockford Darling Harbour and Frasers Suites, Sydney.

Frasers Hospitality Trust holds hotels and serviced residences in Singapore and across the region and raised S$365.2million. The REIT also has a right of first refusal to purchase six further hospitality assets in Australia including Sofitel Sydney Wentworth, InterContinental, Adelaide, Hyatt Hotel Canberra, Fraser Place Melbourne, Capri by Fraser, Brisbane and Fraser Suites Perth.

“Singapore continues to grow as a major regional hub for REITs,” said Andrew Cannane, Perpetual’s General Manager Corporate Clients. “We continue to experience strong demand for our Singapore trustee services as well as trustee services for cross-border transactions incorporating Australian assets.”

Mr Cannane said Perpetual is currently working on a number of other S-REIT mandates that may list in the remainder of this calendar year.

The IPO of the Frasers Hospitality Trust further boosts the thriving Singapore IPO market, with a recent APREA report, sponsored by Perpetual, naming Singapore as one of the top two REIT markets in Asia Pacific due to its strong regulatory framework, reporting, valuation guidelines and governance in relation to related party transactions.

“Perpetual’s expansion into Singapore, following the acquisition of The Trust Company, means we are uniquely placed as the only trustee with licences in Singapore and Australia. Therefore we are able to provide our expertise in both markets and facilitate cross-border transactions between the two regional neighbours,” Mr Cannane said.

“With the pilot of the Asian Regional Funds Passport set to commence in January 2016, we expect to see cross-border flows continue to grow and we will be well placed to help clients across Australia and Singapore take advantage of this emerging regional collaboration,” he said.

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Alexander McNab

Strong investor interest has seen Blue Sky Alternative Investments Limited raise more than $60 million in an Initial Public Offering (IPO) of its Alternatives Access Fund, exceeding the minimum subscription level of $50 million.

The new Listed Investment Company (LIC), set to debut on the Australian Securities Exchange (ASX: BAF) on Monday 16 June, will be Australia’s only directly managed, alternatives-focused LIC, a unique investment vehicle available on a wide range of platforms[1].

Blue Sky’s investment director Alexander McNab said the listing marked Blue Sky’s most important milestone to date.

“Now Australian investors can directly access the only actively managed diversified alternatives investment vehicle on the ASX.”

According to Rainmaker data from December 2013, alternatives are the fastest growing asset class in Australia, increasing from five percent of all investments in 1997 to more than 13 per cent at the end of 2013. This trend is continuing with almost 20 per cent of all investments forecast to be allocated to alternatives by 2033.

Alexander McNab also thanked the joint lead managers to the offer Ord Minnett Limited and Morgans Corporate Limited, and co-lead manager Shaw Corporate Finance Limited for their role in the capital raising.

Ben Wilson from Ord Minnett Corporate Finance said they had received a lot of interest from financial planning, private wealth, SMSF and retail investors, who had found it hard to access alternatives until now.

“While most Australian LICs invest in listed equities and fixed interest, the Alternatives Access Fund will hold a diversified portfolio of alternative assets managed by Blue Sky across the company’s four divisions of real assets, private equity and venture capital, private real estate and hedge funds,” Ben Wilson said.

Official quotation of the company’s securities is due to occur on Monday 16 June 2014. The company raised $60.39 million under the offer by the issue of 60,391,800 ordinary shares each fully paid at an issue price of $1.00.

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[1] Blue Sky Alternatives Access Fund Limited (ASX:BAF) will be available on the following platforms and MDA providers: MLC Wrap, BT Wrap, Netwealth, Macquarie Wrap, Asgard, HUB24, Mason Stevens and Managed Accounts (IAS).

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PM CAPITAL has raised $225 million across two IPO’s since November 2013. The second IPO was targeted at investors looking for specific global exposure in the Asian region, and raised $54 million across 1,325 investors, varying in size.

Chairman of the PAF, Brett Spork, said the listing is reflective of a growing investor appetite for Australian investors wanting to diversify offshore and further recognising that Australian stocks which previously exposed investors to the Asian growth story, may no longer be a viable proxy.

“Investors are realising that in order to get exposure to Asia, they need to look beyond BHP and RIO, and really exploit where the growth opportunities in the Asian Pacific region will be over the next decade- the 4 billion evolving consumers who are growing in affluence”.

Chris Donohoe, CEO of PM CAPITAL, said the global LICs were attractive as the consensus from brokers was that the LIC structure appealed to SMSF investors, who require greater diversification to offshore equities.
“While there are numerous competing Australian LICs, the number of globally focused LICs is minimal, and the timing was ideal with the Australian dollar at elevated levels”.

Donohoe thanked the brokers involved in the raising, who contributed to the majority of the capital raised.
“We specifically thank Ord Minnett, Taylor Collison, CBA Equities and Morgans for their support of helping raise $54,203,942 across 1,325 shareholders. The stapled price of combined Shares and Options commenced trading today at $1.06”.

“While we had almost 500 financial planners across the country attend our roadshow, the vast majority of the capital raised came form the brokers. We expect planners to access the opportunity through their more traditional methods, which is why we have the products available on major platforms like Colonial First State and Macquarie Wrap”.

PM CAPITAL is a Sydney based specialist equity and income fund manager that was founded in 1998 and manages $1.7 billion in funds under management (as at 30 April 2014). The firm is owner-operated and has a long-term track record of managing equity portfolios. The investment process is a research-intensive, bottom-up approach that results in the portfolio holding high conviction positions in companies that are assessed to be trading below their long term intrinsic value.

The Company’s proposed investment mandate has been based on the guidelines of the PM CAPITAL Emerging Asia Fund (EAF), which has achieved a total return of 188.9%, since its inception in 2008, which compares favourably against the MSCI Asia (ex Japan) Equity Index (Net Dividends Reinvested, AUD) total return of 16.6% (as at 30 April 2014).

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In contrast to most Australian LICs, which invest in listed equities and fixed interest, the Blue Sky Alternatives Access Fund LIC will have a diversified alternatives focus and will be directly managed by Blue Sky’s experienced team.

The LIC will co-invest alongside direct investors in Blue Sky’s managed funds across the company’s four alternative asset classes of real assets, private equity and venture capital, private real estate and hedge funds.

According to Blue Sky’s investment director Alexander McNab, overseas investors have long enjoyed the benefits of substantial allocations to alternative asset classes but there have been barriers for Australian investors.

“There is a growing appetite for alternatives in Australia, but access and liquidity have been problematic. Until now, these funds were only targeted at institutional investors,” Mr McNab said.

“The Blue Sky Alternatives Access Fund is removing these barriers and providing financial planning, private wealth, SMSF and retail investors with a simpler way to get exposure to Blue Sky’s managed alternatives.

“Launching a listed diversified investment product has been a long-term strategy for Blue Sky,” he said.

In Australia, allocation to alternatives has almost tripled from five per cent in 1997 to 14 per cent in 2013, and is forecast to rise to nearly 20 per cent by 2033 according to a Rainmaker report from December 2013.

With a low correlation to traditional asset classes such as listed equities and bonds, alternative assets have the potential to reduce volatility and enhance portfolio returns.

Blue Sky, which launched in 2006 and listed in 2012, currently has a market capitalisation of $125 million and more than $550 million in assets under management.

Participants in the IPO will receive one separately listed option (exercisable at $1 for up to 18 months) for every share acquired in the IPO.

Ord Minnett Limited and Morgans Corporate Limited are joint lead managers of the offer, and Shaw Corporate Finance Limited has been appointed co-lead manager.

A prospectus (Prospectus) in respect of the offer has been lodged with the Australian Securities and Investments Commission and is available at blueskyfunds.com.au/accessfund.

The offer of securities by way of issue is contained in the Prospectus and you should consider the Prospectus in its entirety before deciding whether to acquire the securities.

If you wish to acquire securities under the offer you will need to complete the application form that will accompany a copy of the Prospectus once the ASIC exposure period has ended.  You may not apply for securities under the Offer before that time.

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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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ING Investment Management Australia’s business provides a number of investment strategies and products directly to the Australian institutional and wholesale markets.

The business had EUR 24.8 billion (AUD 34.0 billion) in assets under management as of 31 March 2011, the majority of which is managed on behalf of ANZ’s wealth management business, OnePath.

In a letter announcing the sale, CEO Steven Billiet writes “the  transaction supports ING‘s objective to actively manage its capital and portfolio of businesses to ensure an attractive and coherent combination for the announced potential IPOs of its insurance and investment management activities.

“ING has previously said it plans to divest its insurance and investment management operations by the end of 2013 through a base case of two IPOs: a European-led IPO including the European and Asian insurance and investment management businesses, and a U.S.-focussed IPO.

“With a strong presence in Europe, the Americas, and nine Asian countries, ING Investment Management remains well-positioned in relation to the attractive Australian market.
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“We continue to manage an array of off-shore strategies in our various international investment centres, which are available to our clients domestically, regionally, and globally.
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“The transaction is subject to regulatory approval by the Dutch government and is expected to close in the fourth quarter of 2011. ING IM will be working with UBS Global Asset Management to ensure a smooth transition for all clients, but there will be no changes to client relationships or the way funds are managed in the short-term.
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“We understand that you will likely have questions or need additional information and we remain committed to keeping you updated on developments. In the meantime, our focus remains on delivering superior investment returns and servicing the needs of our clients.”

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