Listed investment company WAM Income Maximiser Ltd (ASX: WMX), which only debuted on the ASX in April this year, has tapped institutional shareholders for an extra $120 million, and is offering its retail shareholders a chance to get in on the action at a discount.
The company, which was worth $168 million at the close of trade on Thursday, has an interesting model, whereby it pays dividends on a monthly basis – perfect for those looking for a steady income stream.
It aims to make a return, including franking credits, of the official Reserve Bank of Australia cash rate, plus 2.5% on a per annum basis.
Early results are strong
In announcing on Friday that the company had raised an additional $120.2 million from institutional investors via an oversubscribed placement of new shares, Lead Portfolio Manager Matthew Haupt stated that the company had been performing strongly since its initial public offering (IPO) in April.
After fully deploying the IPO proceeds ahead of schedule in May, WAM Income Maximiser has continued to outperform across various market cycles. Our recent ability to outperform a buoyant equity market while maintaining significantly lower risk has been pleasing. We have achieved this by anticipating pivots in central bank policy, identifying key yield curve dynamics early and positioning the portfolio accordingly. Combined with our detailed fundamental research, this approach has driven the outperformance.
The good news for existing shareholders is that they'll also be able to purchase new shares at a discount. The company will offer them new stock, up to a cap of $30,000 per shareholder, at $1.60 per share, compared to the current price of $1.66.
The company said in statements released to the ASX on Friday that it had steadily increased its payments to shareholders over the past few months.
In August, it paid out a fully-franked dividend of 0.2 cents per share, increasing to 0.25 cents in September and 0.3 cents in October.
The distributions were expected to continue increasing, to 0.35 cents in November and 0.4 cents in December.
Mr Haupt said in a market update released last week that the company remained bullish about resources stocks.
Within equities, we are overweight resources exposures, anticipating re-acceleration in global growth as uncertainty fades, as well as stimulus from China. History suggests that when short-term bond yields rise in Australia, resources stocks tend to outperform.
The new discounted shares on offer are for shareholders who were registered as of this past Thursday, 16 October.
