VGI Partners' dual pitch to investors

The Sydney hedge fund manager is raising $300 million for an existing listed investment company and $75 million to list its wider business.

VGI Partners Global Investments Limited (ASX: VG1) completed a $98 million placement to sophisticated investors and will soon open a $202 million entitlement offer that runs May 23 to June 6.

The LIC takes long and short positions in global listed securities and has returned 17% on post-tax NTA basis since its 2017 inception.

It currently has a market cap of around $700 million.

"The VG1 equity raising is being undertaken in response to strong demand from existing VG1 shareholders to increase their investment. The funds raised will be invested in accordance with the company's previously disclosed investment strategy and will provide additional flexibility in times of market volatility," VG1 chair David Jones said.

The entitlement offer is priced at $2.34 which is the same as April 30 NTA and a 4.9% discount to May 7 close.

Manager IPO

VGI Partners was set up by former Caledonia Investments portfolio manager Robert Luciano in 2009.

The company manages about $2.1 billion through its master fund ($814 million), offshore funds ($246 million), independently managed accounts ($438 million) and the LIC (to have $937 million after the LIC raise).

Its net profit after tax stood at $34.9 million, almost tripling in three years. Last year, VGIs funds collected about $19 million in management fees and $25 million in performance fees.

The $75 million raise will represent on following completion of the offer, approximately 20% of the issued Shares of VGI Partners. It will list on the ASX with a market capitalisation of $369 million under the expected code of VGI.

This means a price-to-earnings ratio of 10.6 (market capitalisation/pro forma CY18 NPAT).

The offer is priced at $5.50 per share and open only to eligible VGI shareholders. Investors who participate in the LIC's entitlement offer will earn the right to $1 of shares in the wider business for every $4 of shares they buy of the LIC's entitlement offer.

After the IPO, Luciano will hold 61.2% of the company, Douglas Tynan will hold 16% and Robert Pointer will hold 2.8% with new investors holding the rest 20.1%. VGI Partners is expected to give certain employees 4.8 million options before the offer closes.

Read more: VGI PartnersRobert LucianoCaledonia InvestmentsDavid JonesDouglas TynanRobert Pointer
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