Sydney-based hedge fund VGI Partners Limited (ASX: VGI) became a public company today after issuing 13.6 million shares to investors at $5.50 per share. In total it will have 67.07 million shares on issue, which are already trading as high as $10 this afternoon to provide its select IPO investors an instant stag profit.
If we generously take the 67.07 million shares currently on market we can see that the group now has a market value around $670 million to mean at that valuation it trades around 16x pro forma calendar year 2018 adjusted net profit.
It’s notable that performance fees made up a big chunk of its profit in 2018 and it charges performance “fees equal to 15% of performance subject to a high water mark mechanism.” This rule applies to each portfolio.
Performance fees can vary wildly from nothing to tens of millions or more in a six-month period depending on how its investments perform.
For example in 2018 performance fees made up a total of $44.9 million out of $64.8 million in total revenue.
It goes without saying that any potential investors should read the full prospectus for further details and potentially take professional advice.
VGI’s longest running and flagship fund VGI Partners Master Fund has returned 14.6% per annum net of fees since it was established in 2009. As at 31 March 2019 it had around $2.1 billion in funds under management a lot of which is reportedly with high-net-worth and ultra-high-net-worth clients.
It’s perhaps most famous in Australia for short bets against Slater & Gordon Limited (ASX: SGH) and Corporate Travel Management Ltd (ASX: CTD), although most of the positions it takes are “long’ positions in listed equities.
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Motley Fool contributor Tom Richardson owns shares of Corporate Travel Management Limited. The Motley Fool Australia owns shares of and has recommended Corporate Travel Management Limited. 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.