WAM Income Maximiser bucks the market chaos to raise $150 million

In this edition of the IIR LMI Monthly Update we take a look at the key news in April as well as some trade ideas given the current dislocation between NTAs/NAVs and Share/Unit Prices across parts of the LIC and LIT market and the opportunities they potentially present for investors. See the attached report for the trade ideas.

The keys news in April included:

WAM Income Maximiser Limited Commences Trading

The Company has been well bid in its first few days of trading. Given the strategy and the current market environment, we would expect there to be support for those that might have been hesitant to invest in the eye of the storm during the capital raise.

The equity component will be invested in what the Manager has determined to be high quality stocks from within the S&P/ASX 300 Index and the debt component will be invested in investment grade corporate bonds and notes, hybrids and short-term money market instruments. The Manager can invest in government bonds at its discretion, however investment grade corporate bonds, notes and hybrids are expected to be the core investments. The portfolio is designed to provide a regular income stream and capital growth over the long-term.

PAI and PMC Boards Recommend Scheme to Convert Shares into Units in ETMFs

The Board noted the following with regards to the Scheme: 

• The Scheme achieves the primary objective of solving the discount on an ongoing basis whilst investors retain exposure to the strategy; 
• The Scheme is in line with industry trends; 
• Premiums for LICs can be transitory and may evaporate post an acquisition; and 
• The Scheme is highly executable and proceeding according to schedule with shareholder meetings scheduled to for late July 2025.

PGF have seemingly stepped back from their offer with PGF’s response to the announcement stating that they “remain open to re-engaging with the PMC and PAI Boards at a future date, should it be appropriate to do so.”

Under the current proposal, Platinum would issue shares to L1 Capital with L1 Capital shareholders owning ~75% of shares in Platinum post the merger. The combined entity would participate in performance fees relating to the first 5% of absolute returns from L1 Capital’s LIC, LSF, with any excess performance fees on returns above 5% distributed to existing L1 Capital shareholders. 

RF1 Updates Investment Guidelines

• Concentration - Single stock position limit of 2.5% with approval required from the Investment Committee (IC) beyond these limits. There will also be lower limits for stocks with binary outcomes. 
• IC - Paul Moore and Adrian Redlich have been appointed to the IC. We view additional diversification to the IC as a positive. 
• Correlation - there will be increased emphasis on uncorrelated strategies to improve risk-adjusted returns and reduce drawdowns. We note that since inception the Fund has increased the diversification of the strategies in the Fund and the recent increase in the Water strategy highlights the increased exposure to uncorrelated strategies. 
• Liquidity - the Manager will enhance the liquidity requirements for large positions and seek to increase portfolio liquidity through the deployment of strategies with a higher median market cap.

As mentioned above, the Fund has increased the exposure to uncorrelated assets and is seeking to further increase the emphasis on uncorrelated strategies, with a key objective of the Fund to provide strong risk-adjusted returns with limited correlation to equity markets. The Fund has achieved this with the NAV delivering a return of 14.7%p.a. since inception to 31 March 2025 with a correlation of 0.46 to the S&P/ASX 300 Accumulation Index.

SNC Announces Quarterly Dividend of 1.4 cents per Share

The quarterly dividend represents an annualised dividend of 5.6 cents per share and represents an annualised yield of 6.2% on the NTA and 7.2% on the share price as at 31 March 2025.

NC has a healthy level of dividend coverage and franking account with the capacity to pay fully franked dividends of 24 cents per share based on the current reserves. This represents more than 4 years of fully franked dividend coverage at the annualised rate of 5.6 cents per share.