Spheria Asset Management has launched a listed investment company (LIC), Spheria Emerging Companies Limited, to provide investors with access to small and micro-cap stocks in the Australian and New Zealand listed equity markets.
The initial public offering (IPO) is comprised of 125,000,000 fully paid ordinary shares with an application price of $2 per share. Spheria intends to raise $250 million from the process, with no oversubscriptions.
The small and micro-cap investment team of Spheria Asset Management will run the portfolio using a process centred on fundamental analysis to identify high-quality, low-risk shares in companies it has assessed to have the ability to generate sustainable cash flows through the business cycle.
Investors’ returns will be distributed in the form of regular fully franked dividends and will be generated from both income and capital growth from the shares held in the portfolio. The return objective is to outperform the S&P/ASX Small Ordinaries Index.
Research house Lonsec has already awarded the LIC a ‘highly recommended’ rating based on Spheria’s ability to source investment opportunities in the small and micro-cap sectors.
“Markets are typically inefficient when pricing small and micro-cap stocks, enabling the investment manager to identify great businesses with strong earnings potential that have been mispriced by the market,” Spheria Emerging Companies independent director Lorraine Berends said.
“This is an opportunity for investors to gain access to an experienced manager who can analyse the large universe of small and micro-cap stocks, characteristically under-represented in Australian retail investors’ portfolios.”
The IPO opened on 25 October and is expected to close on 24 November. Share allotments and holding statements are expected to be despatched on 1 December with the shares in the LIC expected to commence trading on the Australian Securities Exchange on 5 December.