It's all happening in LICs & LITs
August was a busy month for LICs & LITs with results, restructures, buy-backs and dividend shifts making headlines across the market.
In this edition of the IIR LMI Monthly Update we take a look at the key news in August. It was an extremely busy time for LICs and LITs in August with FY25 results being released combined with a significant amount of announcements across the market regarding portfolio and vehicle structures, positioning for manager mandates, placements and a move to more frequent dividends.
Key news items included:
PAI Shareholders Approve Scheme
Platinum Asia Investments Limited (PAI) shareholders approved the Scheme to exchange their shares for units in Platinum Asia Complex ETF (ASX: PAXX) at the Scheme Meeting on 25 August 2025. As part of the transaction, the Company paid a special dividend of 20.11 cents per share, which was 91.51% franked at the company tax rate of 25%.
A total of 67.3 million new units in PAXX were issued to PAI shareholders and PAI has been removed from trading on the ASX as result of the Scheme being implemented shortly after the Scheme Meeting.
The conversion to units in PAXX provides PAI shareholders exposure to the strategy and the ability to exit around NAV. Given the Company had traded at a material discount for a prolonged period of time, shareholders voted overwhelmingly in favour of the Scheme.
WCMQ Launches Secondary Issue and Loyalty Bonus
WCM Quality Global Growth Fund - Active ETF (ASX: WCMQ) announced the launch of an off-market issue of units in WCMQ and an investor loyalty bonus during the month. The Secondary Issue offer opened on 11 August and closed on 29 August, providing unitholders the opportunity to invest in new units in WCMQ at NAV without incurring brokerage costs. A total of 1.07 million new units were issued under the Secondary Issue with total applications of $10.8 million.
Unitholders that participate in the Secondary Issue may have bonus units allotted to them in 12 months’ time if they stay continuously invested for the 12 month period. The number of bonus units will be 1.25% of the value of the units allotted in the Secondary Issue. The total number of bonus units received will be calculated using the NAV per unit on the 12 month anniversary of the allotment of units under the Secondary Issue. The bonus units are equivalent to the management fee for one year on the units issued under the Secondary Issue.
The Fund announced a distribution for the year ending 30 June 2025 of $1.749 per unit, unfranked. This represents a distribution yield of 15.1% based on the NAV as at 30 June 2025. The Fund has subsequently announced changes to the distribution policy. Effective 28 July 2025, the Fund will increase the frequency of the distribution from annual to quarterly, designed to provide a more regular income stream to investors and greater predictability. The Fund has also introduced a minimum annualised cash yield target of 5.0%p.a. (1.25% per quarter), calculated on the NAV as at the last day of the preceding financial year.
PIA Seeks to Add Private Credit to the Mix
On 21 August 2025, Pengana International Equities Limited (ASX: PIA) announced a proposal to add global private credit exposure to the portfolio. Under the proposal, exposure to the global equity strategy managed by Harding Loevner will remain unchanged with the Company taking out a loan to invest in the global private credit strategy managed by Pengana with the loan secured by the global equity portfolio. The Company has a target return from the global private credit investment of 4.5%p.a. above its cost of debt. The specific details of the loan have not been disclosed publicly, however if we take a look at the trailing 12 month running yield of Pengana Global Private Credit Trust (ASX: PCX) which is the strategy that PIA will be investing in if the proposal is approved, a return of 4.5% return above the return places the cost at debt at a very attractive level. In the event returns from the global private credit strategy are insufficient to cover the costs of debt, Pengana Capital Group (ASX: PCG) will cover the debt costs and in return for providing this backstop will share in the returns from the global private credit investment each year the strategy exceeds the target return. The loan will represent ~33% of the total assets of PIA and will be floating rate to reflect the floating rate structure of the underlying private credit investments.
Under the proposal, the dividend frequency would increase from quarterly to monthly with the Board intending to increase the annual dividend 56% to 8.4 cents per share with dividends intended to be fully franked.
The Company has made the proposal in an attempt to provide an alternative solution for investors given the phase out of hybrids with the Company providing a combination of a fully franked income stream and potential for capital growth under the proposed structure.
Investors have the ability to implement this strategy themselves with an investor able to invest a portion of capital in PIA and PCX if they were seeking exposure to both strategies. The key difference of bringing the global private credit strategy into the LIC vehicle is the ability to generate franking credits. PCX’s distributions are unfranked, however when investing through the LIC, PIA pays tax on the income received from the private credit strategy which generates franking credits that can be passed on to shareholders.
There has been a number of income-focused strategies that have come to market to plug the whole that hybrids will leave for retail investors. The proposed structure would provide investors exposure to a combination of debt and equity to generate a regular, fully franked, income stream however investors should carefully consider the risks involved.
Further details on the proposal will be provided by the Company at the webinar scheduled on 4 September. The proposal is subject to final approval and the finalisation of documents including shareholder approval at the AGM in October. The Company will need approval by more than 50% of shareholders. The three largest shareholders are Washington H. Soul Pattinson and Company Limited (Sol Patts), Wilson Asset Management Group and Saba Capital Management. Given the relationship between Sol Patts and Pengana you would expect them to vote in favour and Saba will likely favour the proposal if it reduces the discount. Therefore, opponents to the proposal will have their work cut out for them given the low benchmark for approval and the potential for the proposal to be attractive to certain investors.
L1 Capital Limits PMC Buy-Back
Platinum Capital Limited (ASX: PMC) held a General Meeting (GM) in August seeking approval for an on-market buy-back for up to 50% of the shares on issue. The buy-back was proposed to provide liquidity for shareholders seeking to exit after the Scheme to exchange shares for units in Platinum International Fund Complex ETF (ASX: PIXX) was terminated.
L1 Capital supported the buy-back however only on the basis that PMC will buy-back no more than 20% of shares on issue in the period prior to the Extraordinary General Meeting requisitioned by L1 Capital, scheduled for 1 October 2025. The buy-back program was approved by shareholders on this basis. PMC has already bought back over 6.6 million shares and has advised that it is targeting a price of 1%-2% of the post-tax NTA or below for the buy-back.
PE1 Deploys Cash to Buy-Back and has Immediate Impact
Pengana Private Equity Trust (ASX: PE1) repurchased 1.3 million units in July after the Trust announced it had completed the sale of six primary fund stakes with available cash for the previously announced buy-back. PE1’s unit price delivered a 14.7% return in July on the back of the announcement, with the buy-back combined with the market engagement delivering a positive outcome for unitholders and the discount, which narrowed but remains elevated.
We have discussed PE1 regularly in the last few months as a trading opportunity for long-term investors given the material dislocation of the unit price and NAV. We hold the Manager of the portfolio in high regard with PE1 providing investors exposure to a highly diversified portfolio that cannot be replicated by retail investors. With the Trust showing their intention to be aggressive where possible with regards to the buy-back we continue to view PE1 as an attractive opportunity for investors at these levels of dislocation.
Wilson Asset Management Joins the Race to be the Manager for PMC Portfolio
Wilson Asset Management (WAM) have thrown their hat in the ring to be appointed as the Manager for the Platinum Capital Limited (ASX: PMC) portfolio. WAM have entered the race following the disappointment of the Scheme not going ahead to exchange shares for units in Platinum International Fund Complex ETF (ASX: PIXX) and L1 only supporting a pared back on-market buy-back.
Under WAM’s proposal, the portfolio would be managed using the strategy employed for WAM Global Limited (ASX: WGB) and the existing management and fee performance would remain including WAM honouring the recoupment of aggregate underperformance of the portfolio in relation to the calculation of the performance fee. Further to this, WAM would also seek to utilise the buy-back of up to 50% originally proposed by the PMC board with WAM proposing the nomination of three new directors, including Geoff Wilson.
PMC shareholders will make a decision on the manager of the portfolio at the upcoming EGM.
TGF Delivers Profit for FY25 and Declares a Dividend
Tribeca Global Natural Resources Limited (ASX: TGF) declared a profit after tax for FY25 of $5.02 million with an EPS of 6 cents per share. The profit was driven by the improvement in portfolio performance, with portfolio performance heavily skewed to the 2H’FY25. The Company stated that Precious Metals were the biggest contributor to portfolio performance with positions in Uranium and Oil and Gas also contributing positively, while diversified and bulk commodity exposures were detractors from performance.
On the back of the profit, the Company declared a fully franked dividend of 5 cents per share. The Board has opted to take on a risk-on approach with regards to dividends with the Company effectively paying out all profits and leaving no reserves for future dividends. Given the previous experience with dividend payments, IIR would have preferred the Board to take a more conservative approach with dividends given the cyclical nature of the underlying investment universe, however the Board appears keen to reward shareholders to the maximum extent possible and reflects the Company’s confidence in the outlook for the global resources sector. In the Annual Report the Company stated that the Board intends to pay dividends from retained profits where possible and prudent, however it is unclear on the policy with regards to dividend payments, i.e. are the Board seeking to payout all franking credits or are they seeking to deliver a regular stream of dividends. Clarification of the dividend policy would be helpful.
The Company has amended the Dividend Reinvestment Plan (DRP) for the FY25 final dividend with shares to be issued at a price equal to the lesser of the average price of shares acquired on-market over the relevant period or the NTA before the relevant dividend record date. Given the discount at which the Company has traded, we view this as a positive amendment to the DRP.
In an attempt to address the discount at which the Company continues to trade, in addition to the dividend the Company is undertaking a buy-back of up to 10% of outstanding shares over the 12 months commencing 10 September 2025. For this to be effective, the Company will need to ensure the buy-back is aggressive. The Board has announced its intention to accelerate the buy-back while the discount to NTA exceeds 20%.
Bruce Loveday has announced his retirement from the Board after serving on the Board, including as Chair for 5 years, since TGF listed. Todd Warren will be stepping back onto the Board, effective 27 August 2025, after stepping down from the Board in November 2023.
SNC Delivers Strong FY25 Result and Moves to Monthly Dividend
Sandon Capital Limited (ASX: SNC) delivered a strong FY25 result driven by strong portfolio performance with cumulative total NTA return of 26.3% over the 12 months to 30 June 2025. The Company reported a profit after tax of $24.65 million for FY25 with an EPS of 17.14 cents per share. The Company announced a dividend for the June quarter 2025 of 1.4 cents per share, fully franked, to be paid on 5 September 2025.
Post the announcement of the FY25 results, the Company announced it will be increasing the frequency of dividends from quarterly to monthly. In the context of cost of living pressures and falling interest rates impacting earnings on bank deposits, the Board felt this was the best way to reward shareholders. The Company will be modestly increasing the annualised dividend rate from 5.6 to 5.64 cents per share with monthly dividends of 0.47 cents per share commencing in October 2025.
The Company continues to have a healthy profits reserve and franking account with the capacity to pay fully franked dividends of 22.5 cents per share, representing over 4 years of dividend coverage at the annual dividend rate of 5.64 cents per share.
LIC’s that pay a monthly, fully franked dividend with an above market yield have traded very well with the announcement potentially increasing demand for the strategy and having a positive impact on the discount.
WQG Increases Dividend
WCM Global Growth Limited (ASX: WQG) delivered a strong portfolio performance in FY25, although the NTA return was impacted by the highly dilutive capital raising undertaken during the period.
On the back of the strong result and the dividend reserves and franking account, the Company increased the June quarter dividend to 2.06 cents per share, fully franked. The Company has also provided an increase to dividend guidance for the FY26 period with the Company intending to pay a fully franked dividend for the FY26 period of 8.7 cents per share. This represents a dividend yield of 4.5% (6.5% grossed-up) based on the share price as at 31 July 2025.
The DRP is in place for the quarterly dividend with new shares issued at a 5% discount to the VWAP over the relevant period. With the Company trading at a discount, continuing to offer shares at a discount to the discount, while entices shareholders to reinvest their dividends, continues to exacerbate the discount at which the Company trades.
SEC Delivers Strong FY25 Result with Conditional Proposal Seeing the Share Price Trade in a Tight Rage Around the NTA
Spheria Emerging Companies Limited (ASX: SEC) delivered strong performance in FY25, with cumulative total NTA return of 14.4% over the 12 months to 30 June 2025, outperforming the benchmark for the period. Shareholder returns outperformed the NTA return with the narrowing of the discount providing a boost for shareholders.
The Company declared total dividends of 14.1 cents per share, fully franked, for the FY25 period, the highest annual dividend in the Company’s history. During the FY25 period, the Company increased the quarterly dividend amount to reflect 1.5% of the post-tax NTA with shareholders benefiting from the increase in NTA. The dividend policy allows shareholders to benefit during periods of strong performance but also ensures dividends are pared back during market weakness which avoids dividends eroding NTA. As at 30 June 2025, the Company had over 1 year of fully franked dividend coverage at the FY25 annual dividend amount.
In February 2025, the Company reinstated a modified conditional proposal given the success it has had with narrowing the discount with this measure. For the 12 months from 1 April 2025 to 31 March 2026, in the event the average daily premium/discount to pre-tax NTA is greater than 5%, a meeting will be convened for shareholders to vote on whether the Company remains a LIC or is converted to units in the Spheria Australian Smaller Companies Fund. Over the 12 months to 31 July 2025, the Company has traded within a range of -7.0% to 4.4%.
PGF Increases Final Dividend to 6 cents per share
PM Capital Global Opportunities Fund Limited (ASX: PGF) had another strong year in FY25 with NTA (including dividends) increasing 21.0% over the 12 months to 30 June 2025. PGF has delivered a cumulative total NTA return of 22.5%p.a. over the 5 years to 30 June 2025.
In light of the strong performance, the Board increased the final dividend to 6 cents per share, fully franked, above the previous guidance of 5.5 cents per share. This takes the dividend declared for the FY25 period to 11.5 cents per share, fully franked, a net dividend yield of 4.7% (6.7% grossed-up) based on the NTA as at 30 June 2025.
The Board provided dividend guidance of 12.5 cents per share, fully franked, for the FY26 period, with the Company intending to pay an interim dividend 6 cents per share and a final dividend of 6.5 cents per share. The Board intends to maintain the dividend of 12.5 cents per share for the medium-term.
HM1 Rotates Core Fund Managers and Announces Regular Dividend Increases for the Foreseeable Future
Hearts & Minds Limited (ASX: HM1) has announced changes to its Core Fund Managers. Cooper Investors, Regal Partners and Tribeca Investment Partners will be stepping aside with Prusik Investment Management LLP (Prusik) joining the Core Fund Manager contributors, effective 1 September 2025. Prusik is a UK based manager and represents HM1’s first offshore-based Core Fund Manager. Prusik has a high conviction approach with a focus on Asian markets. The changes bring the number of Core Fund Managers back to five.
The portfolio performed strongly in FY25 with NTA (including dividends) return of 25.5%, outperforming the MSCI World Index, Net, AUD. The strong result led to the Company increasing the semi-annual dividend to 9 cents per share, fully franked, a 12.5% increase on the previous semi-annual dividend. Given the franking account and profits reserve, the Board announced that it intends to increase the semi-annual dividend by 0.5 cents per share for the foreseeable future. As such, investors can expect a dividend of 9.5 cents per share, fully franked for the next semi-annual dividend. The Company provides an attractive grossed-up dividend yield for a global equity portfolio.
WMX Shareholders Approve Placement
WAM Income Maximiser Limited (ASX: WMX) shareholders voted in favour of the proposal to issue up to 75 million shares at the Extraordinary General Meeting (EGM) on 25 August 205. The placement will be issued no later than 3 months after the EGM. If the full capacity of shares are issued, this will materially increase the size of the Company providing the benefits of improved liquidity.
As we discussed in our previous monthly newsletter, the Company raised capital in the height of the market volatility earlier in the year which resulted in the Company raising less than it set out to raise, although in IIR’s view did well to get the IPO away given the market conditions. Demand for the strategy has been strong with the Company being well bid to date providing the opportunity for a capital raising.
The Company declared an inaugural fully franked monthly dividend of 0.2 cents per share in July, which was paid in August. The Company intends to gradually grow the monthly dividend to the annualised target income return during the first 12 months of operation. The Company has provided dividend guidance of 0.25 cents per share and 0.3 cents per share, fully franked, for September and October, respectively.
GCI Taps the Market for $75 million
On 28 August 2025, Gryphon Capital Income Trust (ASX: GCI) announced they had completed a Placement to wholesale investors raising $75 million. The Trust issued 37.5 million new units at $2.00 per unit. Post the Placement, the Trust has 561.82 million units on issue.
The Trust also announced it intends to offer a Unit Purchase Plan (UPP), which will provide eligible unitholders the opportunity to apply for up to $30,000 worth of units. With the expectation that units will be issued at the same price as the Placement, the UPP will provide unitholders the ability to purchase additional units at a discount to the current unit price.
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The views here are not recommendations and should not be considered as investment advice.
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