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Investments, LICs

New LIC IPO offers overseas exposure

Australian boutique fund manager Tribeca Investment Partners has today opened its initial public offering (IPO) for a new listed investment company (LIC), Tribeca Global Natural Resources.

The LIC is seeking to raise up to $250 million and aims to deliver investors a compound annual return in excess of 15 per cent.

The company’s investment strategy will be similar to Tribeca’s existing Global Natural Resources Fund, which has delivered a cumulative net return of 233.75 per cent since inception at an average compound annual return of 57.21 per cent after fees since being established in October 2015.

The LIC intends to take advantage of the volatility in the natural resources sector by adopting a long/short strategy, investing along the value chain and through capital structures – equities, commodities and credit – to capitalise on the relative value and valuation mispricing.

While the LIC has a global mandate, its initial focus will be on investments in North America, Europe and the Asia-Pacific region, including Australia.

Tribeca Global Natural Resources portfolio manager Ben Cleary said he believes SMSF investors need to look at LICs as an opportunity to diversify away from Australian equities and look for LICs with adequate exposure to overseas companies.

“The natural resources sector is inherently volatile. Consequently, we believe there is an opportunity to deliver positive absolute returns over the long term using our active and global strategy, regardless of macro conditions,” Cleary noted.

“Central to our investment thesis is that the cyclical nature of the demand in natural resources means investors must be active.

“The high degree of volatility in the natural resources sector means some assets will be mispriced, which creates investment opportunities for investors who have the research capability and deep industry knowledge.”

He said the ability and flexibility to invest both long and short, and across the capital structure of companies, while also being able to use direct commodity exposures to hedge the portfolio, have been valuable to deliver returns in both good and bad markets for the natural resources sector.

The LIC seeks to generate a compound annual return in excess of 15 per cent after fees and expenses, while preserving capital over the long term – five years-plus.

The general offer for the IPO closes on 26 September, with the LIC expected to list on the Australian Securities Exchange on 12 October.

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