Launch Of Magellan High Conviction Trust

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Magellan Financial Group Limited (“MFG”) is pleased to announce that its main operating subsidiary, Magellan Asset Management Limited (“Magellan”), intends to undertake an initial public offering (“Offer”) for ordinary units (“Units”) in a new ASX-listed investment trust, the Magellan High Conviction Trust. A Product Disclosure Statement (“PDS”) for the Offer was lodged with the Australian Securities & Investments Commission on 13 August 2019 and the Offer is expected to open on 21 August 2019.

The Magellan High Conviction Trust will invest in a concentrated portfolio of high quality global companies, weighted towards Magellan’s best ideas and will aim to deliver investors a Target Cash Distribution of 3% per annum. The investment strategy of the Magellan High Conviction Trust will replicate the investment strategy of the unlisted Magellan High Conviction Fund which has returned 16.6% per annum net of fees since inception on 1 July 2013 to 31 July 20191. Magellan will be the investment manager and act as the responsible entity, with Hamish Douglass and Chris Wheldon acting as the portfolio managers.

Magellan is proceeding with the Offer without appointing a broker syndicate and is not paying any fees or commissions to brokers or advisers to handle the raising. The Offer will comprise a priority offer, a wholesale offer and a general public offer. The priority offer will be made to shareholders in MFG and underlying investors in the Magellan Global Trust and the Magellan High Conviction Fund who were on the registers of these entities on 12 August 2019.

Under the priority offer, eligible applicants will receive a valuable loyalty reward of additional Units worth 7.5% of the value of the Units allotted to them under the priority offer (further details are set out below).

In addition, eligible applicants under the wholesale offer and general public offer will receive additional Units worth 2.5% of the value of the Units allotted to them under those offers.

The one-off costs of these benefits will be paid for by MFG.

MFG will also pay all the costs of the Offer in cash so that the opening cash net asset value per Unit is equal to the application price of $1.50 per Unit.

Brett Cairns, Magellan’s CEO, said today: “We are excited about making Magellan’s High Conviction strategy available to investors via an ASX-listed investment trust. The strategy has an outstanding track record having delivered 16.6% per annum net of fees since its inception over 6 years ago and I believe it is a high quality option for investors seeking global diversification.”

Hamish Douglass, MFG’s Chairman and Chief Investment Officer, said today: “We are addressing potential concerns regarding conflicted remuneration by proceeding without appointing a broker syndicate or paying any fees or commissions to any brokers or advisers to handle the Offer. Instead, Magellan is offering directly to investors who subscribe for units in the Offer the right to receive additional units worth either 7.5% or 2.5% of their allotment depending if they subscribe under the priority offer or the wholesale/general public offer. The full cost of the additional units and costs of the Offer will be borne by Magellan. We hope that investors will find the Offer attractive.”

“We believe the unique Offer structure is a win-win outcome for investors that participate in the raising and for Magellan shareholders. Investors will receive valuable additional units in the Magellan High Conviction Trust and Magellan will generate an attractive return on its investment from funding these benefits. This follows the successful raising of the Magellan Global Trust in October 2017 and is consistent with our partnership approach. Focusing on our clients and delivering on our investment objectives will ultimately lead to strong financial outcomes for our shareholders.”

“I intend to take up my priority offer and, in addition, to subscribe for $20 million worth of units under the wholesale offer.”