Fund manager PM Capital has taken an innovative approach to investment in the listed investment company sector, with the launch of a prospectus for redeemable securities linked to its high-performing LIC, PM Capital Global Opportunities Ltd (PGF).
PGF and its subsidiary PM Capital GO 2025 Ltd have jointly issued a prospectus offering LIC securities called PTrackERS, which will be listed on the ASX.
The minimum proceeds from the offer are $105 million and the maximum $491.3 million.
The PTrackERS securities provide an alternative way of gaining access to PM Capital’s global equity management.
Importantly, they provide holders with a known time at which they can gain exposure to the net tangible asset performance underlying each PTrackERS through an option to redeem based on NTA.
The PTrackERS prospectus says that even strongly performing LICs, including PGF, can trade away from their underlying net tangible asset value, creating uncertainty for investors as to whether they can obtain the underlying value of their securities.
The chair of PGF and GO 2025, Andrew McGill says: “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.”
PTrackERS are similar to traditional LIC securities in that they have attributable net tangible assets determined by the investment performance of the PGF portfolio. The PTrackERS will pay distributions, with a target yield of 3 to 4 per cent.
Each PTrackERS will have an issue price of $1.40. On the maturity date of 30 June 2025 the PTrackERS will be mandatorily exchanged for fully paid ordinary shares of PGF – PM Capital Global Opportunities Fund Ltd.
The company’s investment strategy will be managed in line with the strategy of PGF, which is also consistent with the strategy of PM’s unlisted investment fund, PM Capital Global Companies Fund. The global equity strategy has produced a return of 19.8 per cent a year over the past five years by investing in a concentrated portfolio of global securities.
Since inception, the PM Capital Global Companies Fund has doubled the annual returns of the MSCI World Net Total Return Index (AUD) by investing in a concentrated portfolio of global securities
From a tax perspective, PTrackERS holders have the ability to exchange their holdings with capital gains tax rollover relief, and no dilution of pre-tax NTA plus franking credits.
PM Capital is paying for all costs associated with the offer to ensure there is no leakage of investors’ money to pay the costs of the offer.