WAM Global Limited (ASX: WGB) is going to list onto the ASX at the end of this week. The listed investment company (LIC) has apparently raised $466 million for the IPO, which represents the largest capital raising that Wilson Asset Management has undertaken.
According to WAM, the priority allocation was oversubscribed, with close to two thirds of investors being shareholders in other WAM LICs. WAM Global will be the only LIC in the stable that invests in international shares.
WAM Capital Limited (ASX: WAM), WAM Research Limited (ASX: WAX) and WAM Microcap Limited (ASX: WMI) have built a history and reputation for identifying undervalued growth companies which have a catalyst that could boost the valuation.
WAM Global will be taking the same approach, and if it can’t identify an opportunity it will hold cash. That’s why around 25% to 30% (or more) of the portfolio will probably be cash at the start because of how high global valuations are and the current global political environment.
I’m excited by the targets that WAM Global will be targeting with e-commerce, millennials using smartphones, artificial intelligence & automation, 5G, electric vehicles, the rising Asian middle class and food scarcity as ideas. There are very few quality opportunities to take advantage of these themes on the ASX.
The WAM Global team have also said that it won’t be focused on any particular region whether it’s mature or emerging markets. Europe, Asia and North America – all regions will be looked at equally.
ASX valuations are much ‘richer’ than overseas ones, WAM Global might be able to find good opportunities more frequently than its locally-listed WAM peers.
The management fee is a little higher than the other WAM LICs, but hopefully the net performance makes up for it. The WAM Global investment team will need to prove to doubters that it can outperform its benchmark after management and performance fees over the long-term .
If WAM Global can produce market-beating returns after fees, as well as paying a growing fully franked dividend, then it could become one of my favourite LICs on the market. It will need to generate some profit reserves first before it can start paying a dividend.
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Motley Fool contributor Tristan Harrison owns shares of WAM MICRO FPO and WAM Research Limited. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.