A report compiled by IOOF’s Ord Minnett wholesale broking team – seen by InvestorDaily – points to the scarcity of high yielding shares as one of the factors that has seen advisers gravitate towards LICS.
“Constructing a portfolio without taking on higher risk searching for a higher yield has remained difficult in the past few years,” Ord Minnett said.
The “softening of term [deposit] rates” has also played a role in the phenomenon, said the report.
“The fact is that the ASX will be likely to have more new raisings for LICs in 2014 and beyond,” Ord Minnett said.
“IFAs in recent initial public offerings [IPOs] for new LICs have taken the lion’s share of the new offers,” said the report.
The most active players in the IPOs have been “independent self-licensed [financial planning] groups”, according to Ord Minnett.
“The role IFAs have taken identifies the ‘new breed’ of LIC IPOs and boutiques recently come to market,” said the report.
“The reason is that the IFAs can be more nimble in their investment decision-making, and approve new products relatively quickly for inclusion in their APLs,” Ord Minnett said.
Ord Minnett is currently involved in the upcoming IPO of Bailador Technology Investments.
“Bailadors’ investment is usually in businesses that have achieved $2 million in revenue, are turning a small profit and seeking greater commercialisation,” Ord Minnett said.
Bailador, which currently manages $35 million in a “closed end investment trust”, is looking to raise between $30 million to $40 million in a primary issuance.
The investment company is co-managed by former Fairfax Media chief executive David Kirk and CHAMP Private Equity director Paul Wilson.
