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LICs

Monthly dividend LIC oversubscribed

Listed investment company (LIC) Plato Income Maximiser’s initial public offering (IPO) has closed oversubscribed at more than $320 million, representing the third largest LIC raising in Australia.

The LIC will commence trading on the Australian Securities Exchange (ASX) on 5 May.

It is the first LIC launched by Plato Investment Management and seeks to address the investor demand for ASX-listed income-generating securities.

The investment vehicle also provides investors access to an actively managed, diversified portfolio of Australian shares with an income focus and will be the first Australian LIC aiming to provide monthly fully franked dividends.

The company is based on the investment strategy of the Plato Australian Shares Income Fund, which had delivered 9 per cent a year income and a 14 per cent a year total return since inception to 31 December 2016.

The Income Maximiser was designed specifically with SMSFs and pension-phase investors in mind.

“The LIC’s strategy clearly resonated with investors,” Plato managing director Don Hamson said.

“Many of them rely on a dependable income stream from their investment portfolio and want to avoid eating into their capital as they manage longevity risk.

“We recognised an investor need for an income option that is listed on the ASX aiming to pay regular, monthly, fully franked income.

“The strategy can also supplement traditional income assets, such as cash, fixed income and property, which are under pressure from the sustained low interest environment.”

During a media briefing in March, Hamson said income generation was the biggest dilemma for retirees.

“We think our objectives are aligned with SMSFs, particularly the pension-phase SMSFs, because they want income to live off, but they also want a well-diversified portfolio because if you’ve got that retirement nest egg, you don’t want to lose it,” he said at the time.

The IPO sought to raise up to $220 million, with the ability to accept an additional $110 million in oversubscriptions.

The offer period closed on 21 April.

Seed Partnerships is the LIC’s corporate adviser.

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