Hearts and MindsInvestments Ltd

Hearts and Minds Investments Ltd plans to raise up to $500 million and get itself listed on the ASX in November under proposed ASX code as HM1. The IPO opened on Monday 15 October 2018 and is expected to close on 6 November 2018. Shares in Hearts and Minds are expected to start trading on the ASX around 22 November under the code HM1.


The portfolio will be comprising of only 25 key and unique stocks with individual holdings to be approximately 4% of the Portfolio’s NTA. The long positions will be initiated on Australian and international listed securities. The positions will solely be based on the conviction ideas from two groups:

Conference Fund Managers: Nearly 40% of the portfolio will be held in about 10 securities which will solely be based on the recommendations of the fund managers who present themselves at the yearly Sohn Hearts and Minds investment conference. It’s the third year for this conference where the industry professionals share their expertise and provide their best investment advices.

Core Fund Managers: Remaining 60% of the portfolio will be held in 15 securities based on the quarterly recommendations of five leading fund managers: Caledonia, Magellan, Cooper Investors, Paradice investment management and Regal Funds management.

Objectives:

• Providing shareholders with a compelling and concentrated securities portfolio by effectively utilizing the high conviction recommendations of a select group of Fund Managers and hence  maximizing the  shareholder returns over the long term.
• The Company will provide financial aid to leading Australian medical research institutes which will ultimately support the development of new medicine and drive a new generation of medical research in Australia.

The Company will forego any investment fees that are often charged in relation to listed investment companies, instead it will make donations to the designated medical charities in the interval of every six months. The donation amount for every six-month interval will be equal to 1.5% per annum of the average monthly net tangible assets for the previous half year.

The Company intends to apply the Donation Amount in the following manner: –

• 50% of the Donation Amount being assigned in equal proportions to the Medical Research beneficiaries as nominated by each of the Core Fund Managers on annual basis;
• 40% of the Donation Amount being assigned to the Conference founding medical research organization and the Victor Chang Institute; and
• Remaining 10% of the Donation Amount being assigned to eligible Designated Charities, solely at the discretion of the Board on a 12 month basis.

 If there is an increment in overall portfolio value, the donation amount will also increase.

The designated charities include -

• Victor Chang Cardiac Research Institute
• Black Dog Institute
• The Brain and Mind Centre, Sydney University
• Charlie Teo Foundation
• The Children’s Hospital at West mead
• Florey Institute of Neuroscience & Mental Health
• Centre of Human Psychopharmacology, Swinburne University
• Multiple Sclerosis Research Australia
• Orygen
• Royal Prince Alfred Hospital, Research.

Brokers To the Offer:  Bell Potter Securities Limited, Evans Dixon Limited, JB Were Limited, On-Market Bookbuilds Pty Ltd, Ord Minnett Limited, Paterson’s Securities Limited, Shaw and Partners Limited, Taylor Collison Limited, and Wilsons Corporate Finance Limited.

Outlook: Hearts and Minds received a strong support from various family investors who have already committed for more than $185 million. Other members of the board and the investment committee and their associates have given a commitment of more than $40 million. However, Hearts and Minds did not intend to accept oversubscription, while media reported for oversubscription within three days. Hearts and Minds IPO is coming up with an opportunity for all the shareholders to get themselves benefited from the experience of each fund manager, some of them who are not readily accessible to retail investor.
Given the scenario, this one is being watched by many investors given the strength in strategies from different and well known fund managers.
 
 

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