Largest listed investment company IPO since GFC penetrates “hot” market

The lead partner involved in the largest LIC IPO since the GFC says the success of the deal is hugely significant because it proves the ability to enter a market not previously penetrated

Largest listed investment company IPO since GFC penetrates “hot” market
Until now, the Listed Investment Company (LIC) sector has been the “dog” of the funds management industry, but that’s all changing thanks to the largest LIC IPO to list on the ASX since the GFC, says the lead partner of the deal.

Martin Jamieson led the team at DLA Piper, supported by senior associates Nicole Sloggett and Tze Ting Liew.

The firm was the principal legal adviser, on new Listed Investment Company QV Equities Limited and its investment manager, Investors Mutual Ltd.

It commenced trading on the ASX last week, and was the unit trust fund manager’s first listed fund.

The IPO has initially raised $185 million of fully paid shares plus the issue of 185 million exchange traded free options which on exercising would double funds raised to a total of $370 million.

“The IPO market is hot in Australia at the moment, and in essence the LIC sector has just been a small part of the funds management industry until recently,” Jamieson told Australasian Lawyer. “The traditional fund management industry has not in their mind adequately penetrated the broker community and the SMSF sector. But by offering these sorts of products it’s seen as a good way into SMSF, which is huge and growing.

“This successful fundraising by a leading unlisted unit trust fund manager will only escalate the more recent renewed and continued interest in the LIC sector by the mainstream funds management industry."

A deal as significant as this is just further evidence of the ability of traditional fund managers being able to penetrate clients in those areas. It provides the much-needed point of attack that until now hasn’t been clearly identified, he says.

“This is something the broker community can embrace because it’s still tradeable on the ASX and works on their Chess platform.”

But the QV Equities Limited LIC IPO means more to DLA Piper than the recognition of being the principal legal adviser on such as significant deal. Jamieson says its success means the firm can also claim its title as the only legal provider in Australia this year that hasn’t had to do a replacement or supplementary prospectus.

To be listed on the ASX, a prospectus has to be lodged with ASIC to assess and approve. More often than not the regulatory watchdog will require amendments or replacements of the prospectus – but this has not been the case on any of DLA’s LIC projects for 2014.

“It is truly a good achievement,” says Jamieson. “I’d like to claim it’s about knowing your industry. We’ve got a perfect record while doing the largest offering - the offering that raised the most money.”

QV Equities Limited’s listing overtook the largest previous LIC IPO post GFC by PM Capital Global Opportunities Fund, which listed in 2013. This was also advised by DLA Piper.

The firm has supported more LICs in the post GFC market than any other law firm in Australia, says Jamieson.
He is currently acting for a significant Australian unlisted unit trust fund manager – which will be the next largest to date post GFC - to effect the IPO of its first LIC before the end of the year.

“This is a blue blood fund manager. The blue blood traditional fund managing industry has awakened to these opportunities of targeting the broker community and particularly the SMSF sector,” he says.

“The IPO market is hot and brokers have been looking for a product to flog, so fund managers have looked at these – and they’ve been successful…It would seem the broader funds management industry should be exploring these opportunities to penetrate those clients.”

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