Magellan Financial Group reported a 78% jump in its profit for the financial year ending June and announced a $275 million institutional raise for MFG shares this morning.
Magellan's stable of well-performing equities funds are now managing an average of $75.8 billion (up 28%) and raked in about $84 million in performance fees, which is more than double the performance fees they collected last year.
Overall, the group reported NPAT of $377 million for FY19, up from $212 million last year.
Adjusted revenue was $577 million and adjusted NPAT was $364 million, which is 35% higher than the previous year. The adjusted revenue takes into account non-cash items (amortisation expense and unrealised gains and losses) and transaction costs for strategic initiatives.
Magellan also announced it will raise $275 million in an institutional placement fully underwritten by Macquarie.
Of the $275 million raise, Magellan will use $50 million to support its new retirement product and the remainder will go towards seeding strategies in its product development pipeline, costs of the newly-announced LIT's IPO and strengthen the balance sheet to chase future opportunities.
The insto offer is priced at $55.20 per share which is a 6% discount to Monday's close. MFG will issue 4.98 million new ordinary shares, which represents 2.7% of Magellan's expanded issued capital.
The bookbuilding will start today, with the outcome to be announced tomorrow. The new shares will start trading next Tuesday.
Magellan is also launching a listed investment trust for that will replicate the strategy of the Magellan High Conviction Fund which has returned 16.6% p.a. net of fees since its 2013 inception to July end.
The LIT will hold eight to 12 companies of global stocks, aiming a cash distribution yield of 3% per annum paid semi-annually.
The offer is expected to open on August 21 and will include a priority offer, a wholesale offer and a general public offer.
Magellan is not appointing a broker syndicate for the raise. It will also cover the IPO costs through MFG.
"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," MFG chair and chief investment officer Hamish Douglass said in ASX filings.
"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 offer."
Douglass will subscribe to $20 million worth of units under the wholesale offer.