IPO Alert: Spheria Emerging Companies IPO exceeds $100m milestone

The initial public offering of Spheria Emerging Companies Limited (ASX: SEC, Company) has exceeded its minimum target of $100 million in just over two weeks since the offer opening.

The listed investment company (LIC) provides investors with access to an actively managed portfolio of Australian and New Zealand small and micro-cap companies that are highly cash-generative.

The portfolio will be managed by Spheria Asset Management Pty Limited (Spheria, Manager), which is an affiliated fund manager of Pinnacle Investment Management Limited (Pinnacle).

SEC will employ the same investment strategy as the Spheria Australian Smaller Companies Fund, which generated 11.7 per cent p.a. return (net of fees) since inception (11 July 2016) to 30 September 2017. It outperformed the S&P/ASX Small Ordinaries Accumulation Index (Benchmark) by 6.5 per cent p.a. (net of fees) during the same period.

The Chairman of Spheria Emerging Companies Limited, Mr Jonathan Trollip, said, “This illustrates strong demand from investors seeking diversification from highly concentrated portfolios by allocating to a quality small-cap product.”

“At the small end of the market, the opportunity for growth is invariably higher. Also, the smaller cap sector is less well researched, meaning a high-calibre team can exploit pricing inefficiencies. Given the wide universe of smaller companies, it is beneficial for investors to outsource to a specialist manager who has the necessary experience in navigating what is a higher risk but also potentially higher returning segment.”

The IPO intends to raise up to $250 million by issuing 125,000,000 fully paid ordinary shares at an application price of $2.00 per share. Capacity is limited, so there will be no oversubscriptions.

The Broker Firm Offer is expected to close on 17 November 2017 and the General Offer period is expected to close on 24 November 2017. Trading on the ASX is expected to commence on 5 December 2017.

The Spheria investment team has over 40 years of collective investment experience and has witnessed multiple market cycles, working together for 4.5 years. The Australian Smaller Companies Fund, on which SEC is modelled, has a ‘highly recommended’ rating from Lonsec.

There has been strong interest in other LIC IPOs affiliated with Pinnacle. In April 2017, Plato Income Maximiser Limited (ASX: PL8) raised over $320 million.

Pinnacle-affiliated IPO, Antipodes Global Investment Company Limited (ASX: APL), raised over $300 million in October 2016.

Pinnacle currently consists of seven investment affiliates that collectively manage approximately $27 billion in assets across a diverse range of asset classes.

 

Key Dates

Offer Open 25 October 2017
Broker firm close 17 November 2017
General Offer expected to close 24 November 2017
Shares expected to commence trading on ASX 5 December 2017

 

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