The local market's newest listed asset manger in VGI Partners Limited (ASX: VGI) hit a new record high of $15.50 today after the group lodged its prospectus for its new VGI Partners Asian Investments Fund.
It's seeking to raise $800 million by issuing up to 320 million new shares in the fund at an offer price of $2.50. It's also agreed to meet all costs around the raising (circa $7.3m) from its existing cash reserves.
Commonly some retail investors are put off subscribing to these kinds of IPOs as the offer price opens below the subscription price due to associated costs with the IPO, among other factors. Therefore VGI is trying to underwrite the offer price to ensure it trades in line with the fund's net tangible assets and attracts more investors.
It's also offering existing investors in VGI or its funds 'alignment' or 'bonus' units on a 1 for 75 basis. Other alignment shares are also offered to different exisiting investors on a 1 for 125 basis.
Alignment shares are offered as an incentive by the manager to juice the raising and because over a number of years the additional funds under management will pay for itself via management fees.
This kind of 'bonus' offer and meeting all costs approach was pioneered by Australia's most successful pure play funds manager in Magellan Financial Group Ltd (ASX: MFG).
VGI does not manage much institutional money as far as I'm aware as its hedge fund strategies are less popular with conservative institutional investors, although they're popular with its core client base of high net worth individuals, family offices, and other high roller types. All of whom have been handsomely rewarded since the firm's 2019 initial public offering.
