The company will provide diversified investment through a portfolio of approximately 30-40 stocks, predominantly comprising companies from the Australia Securities Exchange (ASX) Midcap and ASX Small Ords indices.
Contango MidCap Income Limited uses a listed investment company (LIC) structure to pay income streams of 7.2 per cent of the value of net tangible assets (NTA) via a quarterly payment.
Contango Asset Management has been appointed as investment manager and has agreed not to charge a management fee for its first two years of operations, allowing the company to build sufficient reserves from which to pay dividends to shareholders.
The decision to list the new company follows market research of 40 advisers and 10 licensees.
"This evolved because we had advisers telling us what they need - reliable income streams so that they can help manage income planning and lifestyle planning for their clients," Contango Asset Management national distribution manager Boyd Peters told InvestorDaily.
"They said to us 'we need income streams that are reliable and you as LICs you have dividend policies where you can see how much will be paid and when it will be paid, whereas with a unit trust there is uncertainty as to how much their distribution will be'," he said.
Applications to subscribe to the Contango MidCap Income Limited's float closes at $200 million or on 6 December, whichever is soonest.
