Spheria Emerging Companies Limited IPO [ASX: SEC]

The Spheria Emerging Companies Limited (the Company, ASX: SEC) Initial Public Offer (IPO) provides a very limited opportunity to invest in an actively managed, Australian and New Zealand small and micro companies portfolio, designed for investors seeking capital growth and portfolio diversification.

It is a confined capacity investment strategy that identifies smaller companies where the present value of cash flows can be reasonably determined and they are assessed to be trading at a discount to their intrinsic value.

The smaller companies universe is more volatile and higher risk. An experienced investment manager in the small company end of the market is paramount to success, for this reason there are only a small number of listed investment companies offering access to a diversified small companies investment portfolio.

Spheria Asset Management Pty Ltd (the Manager, Spheria), is appointed investment manager and is a specialist team with a track record of navigating the higher risk opportunities at the small end of the market.

Investment Objectives

The Company’s investment objectives are to outperform (before fees) the S&P/ASX Small Ordinaries Accumulation Index (Benchmark) over a full investment cycle (typically 3 to 5 years); and provide capital growth and income.

Why Invest?

Diversification to complement concentrated large cap Australian equities portfolios

The Australian equities market is heavily concentrated, the top 20 stocks accounted for 65% of the market capitalisation of the S&P/ASX 100 Index as at 31 August 2017.  Many industry sectors are also concentrated in a few companies.  The Company’s smaller company focus provides investors with diversification to complement heavily concentrated Australian share portfolios.

Rare and limited opportunity

This is a rare opportunity to invest in a listed investment company that will be managed by a specialist team with a track record of navigating the higher risk opportunities at the small end of the market.   There are only a small handful of scalable, quality listed investment companies offering access to a portfolio of small and micro Australian and New Zealand companies. The maximum subscription of the IPO is $250 million.

Marcus Burns and Matthew Booker have strong track records managing small company portfolios

Portfolio Managers, Marcus Burns and Matthew Booker established Spheria Asset Management Pty Limited in April 2016. Marcus and Matthew have deep expertise across equity markets garnered over a combined 40+ years’ experience managing small company portfolios through volatile markets and have worked together for 4.5 years.

Which Investors Might Benefit From Spheria Emerging Companies Limited?

Investors looking to diversify for portfolio growth. Small cap equities can offer investors significant potential for returns, when chosen carefully compared to all other asset classes including medium and large cap equities.

Investment Manager

Spheria is a fundamental-based investment manager with a bottom-up focus specialising in small and microcap companies. Its mission is to achieve strong investment returns for its clients with an emphasis on capital growth and risk management.

Since launching in May 2016, Spheria has steadily grown its assets under management to approximately $384 million (as at 31 August 2017) in small and microcap equity portfolios.

The Company will draw upon and benefit from this depth and breadth of experience in the construction and maintenance of the Company Portfolio.

Investment Team

The principals, Matthew Booker and Marcus Burns were previously the Portfolio Managers of the Schroders Smaller Companies and Microcap Funds. Together they have a combined experience of over 40 years in the industry. The Portfolio Managers Matthew and Marcus are supported by Adam Lund who previously worked with the team at Schroders Investment Management Australia.

Matthew Booker

Portfolio Manager

Matthew has been a Portfolio Manager at Spheria since its inception in April 2016. He has managed small company portfolios through volatile market cycles for over 11 years and has established a track record for generating returns that have exceeded portfolio benchmarks.

More recently, Matthew worked at Concord Capital and then Schroders Investment Management Australia, managing the smaller companies fund as well as the micro-cap product at Schroders Investment Management Australia.  At Schroders Investment Management Australia, the funds co-managed with Marcus Burns generated significant double digit returns above benchmark during their three years together.

Marcus Burns

Portfolio Manager

Marcus has been a Portfolio Manager at Spheria since its inception in April 2016. He has managed Australian, European and global equity portfolios out of Australia and London through volatile market cycles for over 20 years.  Marcus has an established track record generating strong investment portfolio returns for investors.

He worked alongside his Co-Portfolio Manager Matthew Booker at Schroders Investment Management Australia since the beginning of 2013 and co-managed the Australian small and micro-cap portfolios with Matthew. These funds generated double digit returns above benchmark during this time frame.

Adam Lund

Analyst / Trader

Adam is one of the founding members of the Manager at Spheria and is responsible for the trading of all of the Manager’s investment strategies. Adam also has research and portfolio construction responsibilities.

Adam’s career began in 2005 at Thomas Hopper & Partners Chartered Accountants where he worked across the taxation, audit and company account divisions.

Prior to Spheria, Adam spent 5 years as an equities and derivatives trader at Schroders Investment Management Australia. Adam worked closely with Matthew Booker and Marcus Burns trading for the small and micro cap funds.

Investment Philosophy And Strategy

The investment philosophy is to purchase securities where the present value of future free cash flows can be reasonably ascertained and the security is trading at a discount to its intrinsic value.

Keeping an open mind to potential investments is critical to our process and expanding horizons to consider global influences gives us a powerful edge.

Assessing risk is fundamental to Spheria’s investment philosophy. Explicit risk controls include a preference for companies which are geared to a level that the Manager considers appropriate given the nature of the relevant businesses and have free cash flow to support that relevant level of gearing.

The Company’s portfolio will typically be comprised of between 20 and 65 different securities. Pre-IPO securities and cash are also permitted investments.

Board Of Directors

The Company believes that the Manager has the skill, depth of knowledge and history of achieving results using the Investment Strategy and processes to manage the Company Portfolio.

The Manager will be overseen by the Board of Directors who have a broad range of experience in investment management combined with financial and commercial expertise.

Jonathan and Lorraine, being Independent Directors, are free from any business or other relationship that could materially interfere with, or reasonably be perceived to materially interfere with, the independent exercise of the person’s judgement.

Meet our board

Jonathan Trollip

Chairman

Jonathan Trollip is an experienced Director with over 30 years of commercial, corporate, governance, legal and transaction experience.

Jonathan is currently non-executive chairman of ASX listed Global Value Fund Limited, Future Generation Investment Company Limited, and Antipodes Global Investment Company and a non-executive director of ASX listed Kore Potash Limited. He holds commercial private company directorships with Meridian International Capital Limited and BCAL Diagnostics Pty Ltd. In the philanthropy area he is chairman of Science for Wildlife Limited, and a director of The Watarrka Foundation and the University of Cape Town Australia Alumni Trust.

Jonathan has worked as a principal of Meridian for the past 22 years. Prior to that, he was a Partner with law firm Herbert Smith Freehills. He holds postgraduate degrees in economics and law, was admitted as a qualified lawyer in England and Australia and is a Fellow of the Australian Institute of Company Directors.

Lorraine Berends

Independent Director

Lorraine has worked for over 30 years in the pension and investment industries, and possesses extensive experience in both the investment management and superannuation fields.

She serves on the BT Financial Group Superannuation Board, the MDC Foundation Board and is a member of the investment committee of QSuper.  Lorraine served on the Board of the Association of Superannuation Funds of Australia for 12 years and the Board of the Investment Management Consultants Association for 13 years, and has been awarded Life Membership of both associations.

Lorraine is a Fellow of the Institute of Actuaries of Australia, a Fellow of ASFA, a Member of the Australian Institute of Company Directors and holds a BSc from Monash University, Melbourne.

Adrian Whittingham

Non-Independent Director

Adrian joined Pinnacle as an equity partner in 2008 and is responsible for manager acquisition and research as well as having a primary focus of building relationships with asset consultants, institutional investors and financial advisers on behalf of Pinnacle’s specialist investment managers in Australia and offshore. Adrian has 15 years investment experience and sits on the board of Pinnacle Investment Management Group Limited (ASX: PNI), Pinnacle, Hyperion Asset Management Limited and the Manager. Prior to joining Pinnacle, Adrian was a Director at Schroder Investment Management.

Alex Ihlenfeldt

Alternate Non-Independent Director

Alex Ihlenfeldt has over 25 years commercial experience in financial services in Australia and overseas and has proven expertise in the provision of the full suite of turn-key, institutional quality non-investment services for investment managers. He is experienced in operating across the full spectrum, from start- up boutiques to mature investment managers. Alex is currently Chief Operating Officer and Chief Financial Officer of Pinnacle Investment Management Limited with whom he has been associated since inception in 2006.

Prior to joining Pinnacle in 2011, he spent 10 years with the Wilson HTM Investment Group as Chief Operating Officer, Chief Financial Officer and Head of Wealth Management. Alex has a Bachelor of Commerce (Hons) and is a member of the Institute of Chartered Accountants Australian and New Zealand as well as a Fellow of the Australian Institute of Company Directors. Alex is a Director of each of Pinnacle Investment Management Limited, Pinnacle Fund Services Limited, Plato Investment Management Limited, Solaris Investment Management Limited, Antipodes Partners Limited, an Alternate Director of Resolution Capital Limited and he is Chairman of the Pinnacle Fund Services Limited Compliance Committee.

Key Dates

Lodgement of the Prospectus with ASIC 10/10/2017
Offer expected to open 25/10/2017
Broker firm offer expected to close 17/11/2017
General offer expected to close 24/11/2017
Expected date of allotment 01/12/2017
Expected date for dispatch of holding statements 01/12/2017
Expected date to commence trading on the ASX 05/12/2017
These dates are subject to change and are indicative only and times are references to Sydney time. The Company reserves the right to amend this indicative timetable subject to the Corporations Act and the ASX Listing Rules. In particular, the Company reserves the right to close the Offer early, extend the Closing date or accept late Applications.

PROSPECTUS

Download and read the prospectus lodged with ASIC on 10 October 2017.

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Download and Read
the Prospectus

DISCLAIMER

The information in this website has been prepared by Spheria Emerging Companies Limited (SEC). The information contained in this website is for information purposes only.

The information contained in this website is not investment or financial product advice and is not intended to be used as the basis for making an investment decision. Please note that, in providing this website, SEC has not considered the objectives, financial position or needs of any particular recipient. SEC strongly suggests that investors consult a financial advisor prior to making an investment decision.

No representation or warranty, express or implied, is made as to the fairness, accuracy, completeness or correctness of the information, opinions and conclusions contained in this presentation. To the maximum extent permitted by law, none of SEC, its related bodies corporate, shareholders or respective directors, officers, employees, agents or advisors, nor any other person accepts any liability, including, without limitation, any liability arising out of fault or negligence for any loss arising from the use of information contained in this presentation.

This website is not, and does not constitute, an offer to sell or the solicitation, invitation or recommendation to purchase any securities and neither this presentation nor anything contained in it forms the basis of any contract or commitment. SEC’s offer of securities is made pursuant to a prospectus issued by SEC and dated 10 October 2017, which describes the terms of the offer (Offer Document). This Offer Document is available at http://www.spheria.com.au/spheria-emerging-companies-limited-ipo/. Prospective investors should consider the Offer Document in deciding whether to acquire securities in SEC under the offer. Prospective investors who want to acquire securities under the offer will need to complete an application form that is in or accompanies the Offer Document.

This website does not constitute an offer to sell, or a solicitation of an offer to buy, any securities in the United States. The securities of SEC have not been, and will not be, registered under the U.S. Securities Act of 1933, as amended (Securities Act) or the securities laws of any state or other jurisdiction of the United States, and may not be offered or sold in the United States except in compliance with the registration requirements of the Securities Act and any other applicable securities laws or pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and any other applicable securities laws.

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