It's WAR on the ASX. Wilson Asset Management's (WAM) latest Listed Investment Company (LIC) has just debuted on the ASX share market today. WAM Strategic Value Ltd (ASX: WAR) makes its ASX entrance today after months of marketing and signing up new investors for the eventual IPO (initial public offering).
Since May, investors have been able to apply for shares in WAM Strategic Value for a placement price of $1.25 a share. Well today, those shares are trading on the market. So how is the old IPO going for WAM?
Well, not too badly, but perhaps nothing to write home about. WAR shares hit the ASX this morning and opened for $1.26 a share, 1 cent or 0.8% above its placement price. And that's where the share price is hovering at, at the time of writing. So, this price gives WAM Strategic Value a market capitalisation of $226.8 million. That comes from WAM telling investors there will be 180 million WAR shares on the ASX upon its float.
What is WAM Strategic Value?
The latest in WAM's LIC stable, WAM Strategic Value is headed up by WAM founder Geoff Wilson himself. In the company's ASX WAR prospectus, he tells investors that WAM Strategic Value will focus on "identifying and investing in $1 of assets for 80 cents". The LIC will do this by "[taking] advantage of market mispricing opportunities, including securities trading at discounts to assets or net tangible assets (NTA), corporate transactions and dividend yield arbitrages with franking credit benefits".
Here's some more of what Wilson told investors in its prospectus:
Our experience and expertise in managing closed-end vehicles provides us with a unique methodology to identify and benefit from LIC and LIT market mispricing opportunities and engage proactively with boards, management teams, investors and other stakeholders. This primary focus will be complemented by other market mispricing opportunities arising within the corporate sector. Such as takeovers or capital raisings, where we are able to utilise our position as an institutional investor responsible for more than $4 billion of shareholder capital.
ASX hears the drums of WAR
So put simply, WAM Strategic Value is primarily going to be in the business of buying other LIC and Listed Investment Trust (LIT) assets for less than they are actually worth. So what kind of leads do we have on this new LIC? It has presumably invested in a fair bit so far with its $200 million-plus backing, after all.
Well, WAM has yet to give us an official update. But we can gather some valuable information from other sources. The Magellan High Conviction Trust (ASX: MHH) seemed to be an early target. As my Fool colleague Mitchell Lawler flagged at the time, Magellan's High Conviction Trust may have had some interest from WAM Strategic Value. Its units were trading at a 12.2% discount to their underlying NTA value back then. The High Conviction Trust unit price has since rallied to somewhat close this NTA gap.
But some additional ASX releases that came out alongside the IPO today give us a broader picture. According to these ASX releases, WAR shares might represent ownership in LICs and LITs including NAOS Small Cap Opportunities Company Ltd (ASX: NSC) and Pengana International Equities Ltd (ASX: PIA). As well as Templeton Global Growth Fund Ltd (ASX: TGG) and Westoz Investment Company Limited (ASX: WIC).
We'll have to wait for WAM's first investment updates to find out more about this new LIC. But the picture is now a lot clearer on ASX's new WAR LIC.
