Perpetual Equity Investment Company Limited is a newly incorporated listed investment company (ASX:PIC) whose General Offer opens to the public on 21 October 2014. The Company is seeking to raise a minimum $150 million and maximum $600 million under the Offer (includes oversubscriptions with free attaching Options on a one-for-one base exercisable before 10 June 2016, no dividend entitlement).
The Company will invest the proceeds of the raising into a portfolio to be managed by Perpetual Limited under an Investment Management Agreement which will utilise Perpetuals long standing and successful value orientated investment style. While PIC will predominantly invest in a diversified portfolio of Australian stocks, to increase flexibility and opportunity set, management may also invest up to 25% in global shares and 25% in cash.
Zenith’s View
Perpetual is an experienced and well-resourced investment manager and Zenith has long viewed their domestic equities team to be one of the strongest within the Australian market. The team employs a fundamentally driven, bottom-up research effort to identify investment opportunities with their process exhibiting a strong value bias. Zenith views the rigour of the process and experienced team as the key factors contributing to their long-term historical outperformance across Perpetuals suite of funds. The investment process is based on the philosophy that investment markets are semi-efficient and that this provides opportunities to add value through the identification of and investment in high quality companies that are trading at attractive prices. Perpetual believes that the best way to identify such opportunities is through an internal, fundamentally driven, bottom-up research process.
PIC’s Portfolio Manager is Vince Pezzullo who retains total responsibility for investment decisions for the LIC, however the portfolio construction process leverages off the rigorous company research undertaken by Perpetuals analysts. The process seeks to produce a portfolio reflective of the analysts’ best ideas. This will be particularly relevant to PIC as it will be very much a high conviction, concentrated vehicle with more of an absolute return focus than many of their other equities funds. Zenith has a high level of confidence in the investment process and believes that that PIC will generate excess returns for its investors over the medium to long-term. Although PIC has no operating history to date, with such a strong team and proven process, Zenith has no hesitation in assigning Perpetual Equity Investment Company Limited (ASX:PIC) a RECOMMENDED rating.
