Perpetual believes its first listed investment company (LIC) will attract SMSF trustees with its mid-cap Australian and international shares focus.
The Perpetual Equity Investment Company aimed to raise a minimum of $150 million, with the offer period expected to open on 21 October and close on 28 November.
Perpetual Investments portfolio manager Vince Pezzullo said the LIC, which was actively managed, combined the best ideas from the firm’s domestic and global equities portfolios.
Pezzullo said its mid-cap focus was typically where SMSFs did not buy directly.
“Coming to market now, we’ve always wanted to make sure that just like our flagship Industrial Share Fund, that we do it with a more modern take on it,” Pezzullo told selfmanagedsuper.
“I think today the SMSF investor requires something slightly different.
“SMSFs can be quite restrictive if you’re buying domestic stocks only – they own one or two of the large banks, Rio and BHP and that’s pretty much it for their direct holdings, so this will assist in areas where there tends to be a lot of alpha in the mid-cap part of the market.”
In addition, consistent dividends were the LIC’s real value, he said.
“Especially in the pension phase, having dividends that you know you’ll get every six months [is appealing for SMSFs],” he said.
“So it’s a bit more efficient with consistent distribution, whereas in a unit trust you have to distribute all income and capital gains.
“Not having volatile dividends is key.”
Perpetual had generated growing interest from its existing investors for a LIC structure, he said.
“We have a very large unit trust managed fund business and the SMSF market has grown for the last 10-odd years,” he said.
“A lot of customers from our managed funds have set up their own SMSFs and have asked us about whether we have an LIC option, so we’ve been getting asked this for the last 10 years.”
The LIC will be made available through broker channels and is expected to be on all major platforms.
It is designed to deliver regular income and long-term capital growth through investment in Australian listed securities with a mid-cap focus, as well as up to 25 per cent of the portfolio’s net asset value in opportunistic allocation to global listed securities.
The LIC will offer flexibility to manage potential equity market risk by moving up to 25 per cent of the portfolio’s net asset value into cash, deposit products and senior debt.
The offer for the Perpetual Equity Investment Company has been arranged through CBA Equities and Taylor Collison.
It is being jointly managed by Macquarie Capital, Morgan Stanley Australia and ANZ Securities.
The co-lead managers are Baillieu Holst and Lonsec.
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