VGI Partners Asian Investments Limited
 

New Strategy to Support Asian Investments:VGI Partners Asian Investments Limited (Proposed ASX Code: VG8) is a new entity proposed byVGI Partners Limited (ASX: VGI) to support its new investment strategy for Asia-listed equity investments or investments with significant exposure to the region.

On the back of improving governance standards in Asia in recent years and many higher quality companies becoming more investor-friendly, the company has been focusing on increasing the time and resources committed to research the best businesses in the Asian region and has four member of its investment team allocated on the ground in its Tokyo representative office. Hence, the company came up with a new investment strategy by setting up of VG8 that will offer extended exposure to the economic dynamics of the Asian region. VGI Partners Limited is seeking a long-term compound growth of 10-15% per annum net of fees.

Investment Philosophy: VGI Partners updated that the new company will be overseen by its existing investment team comprising 16 members. The entity will be managed with the same investment philosophy that has been applied to the company’s global investment strategy for the last eleven years. The current investment philosophy has seen significant outperformance from the VGI Partners Master Fund that delivered a compound annual return of 15.2% to investors. Moreover, the company’s funds have tended to outperform during periods of subdued or flat market performance. The trend went on till August 2019, when the Master Fund reported a return of 2.3% which the MSCI World Total Return Index (AUD)went up by 0.2%.

Purpose: The proposed strategy will work further on the group’s 11-year record of providing investors with capital growth over the long term through investments in a concentrated portfolio of global listed securities. VG8 will undertake long-term investments in great businesses that are not fully valued by the market. In addition, it will also punch in investments into short selling securities, considered to be vulnerable to a material decline in price.
Prospectus Details: As per the recent offer issued by VGI Partners, VGI Partners Asian Investments Limited has offered up to 320 million ordinary shares (VG8 Shares) for subscription, at an offer price of $2.50 per share. This will amount to a total capital of $800 million before acceptance of any oversubscriptions. In addition, the company reserves the right to accept oversubscriptions up to an additional amount of $200 million. VGI Partners committed not to undertake any follow-on raising into VG8 for at least three years if the offer raises at least A$500 million.

Minimum Subscription Reached: VGI Partners Limited recently announced that the company received applications in excess of the minimum subscription amount of $250 million by the end of the first day of the offer period. The offer opened on 23 September 2019. As per an announcement to the exchange on 24 September 2019, total applications under the offer now exceed $485 million.
All the applicants under the VG8 IPO will be issued Alignment Shares, based on the allocation of VG8 Shares. The number of Alignment shares to be issued will be calculated as under:

(a) Under VG8 Cornerstone and VG8 Priority offer components of the IPO, the eligible applicants will be issued 1 Alignment Share for every 75 VG8 Shares.
(b) Under the VG8 Broker Firm Offer and the VG8 General Offer components of the IPO, the applicants will receive 1 Alignment Share for every 125 VG8 Shares.

 

Issue Details (Source: Company Reports)

Important Dates: The Broker Firm offer is expected to close on 15 October 2019. Expected closing date for the Priority Offer and General Offer is 22 October 2019. Shares are expected to commence the trading on ASX on a normal settlement basis on 13 November 2019.


Timetable (Source: Company Reports)

The newly formed entity will perform on the strategy of promoting capital growth over the long term. Through VG8, VGI Partners Limited is now planning to approach the most high-quality businesses in Asia, which are undervalued in the market in comparison to similar companies in other developed economies. Hence, in light of aforesaid factors, we advise investors to keep an eye on stock performance post IPO.

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