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GQG - GQG PARTNERS INC


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GQG Partners Inc (GQG) is a fund manager looking to list on the ASX in 2021, in what is touted to be the biggest capital raise of the year. Terms are out and the founders are looking to float 20% of the assets. Retail investors will have access, via a broker allocation. Interest can be registered via the CommSec website if interested.

 

As an Florida based international manager the reasons for the ASX are not that obvious, initially; a dive into its history shows an early alignment with Australians and especially Pacific Current Ltd (PAC), a listed fund manager that came out of the old Treasury Group.

 

GQG soon to list; the biggest IPO this year.

The company was co founded by our Executive Chairman and CIO Rajiv Jain and CEO Tim Carver in June 2016. Tim Carver has extensive experience in establishing and growing investment boutiques with a differentiated proposition for clients, having immediately prior to cofounding GQG, served as CEO of ASX listed Pacific Current Group, a multi boutique asset manager.

Additionally as GQG grows it is looking at Geographic Expansion. From the PDS; Since our launch, we have successfully expanded our client base into new geographies. We expect to continue to experience growth in certain geographies such as Canada and the Gulf region. In particular, we have invested heavily in building our presence in Australia with a dedicated team and fund infrastructure to benefit from the superannuation system and long term investor focus that make Australia a key market globally for the asset management industry.

 

 

Star stockpicker primes billion dollar ASX payday

The listing of Florida asset manager GQG Partners on the ASX this month will be the biggest of the year, linking local investors to one of the top pandemic winners in the funds management industry and delivering a multibillion dollar windfall to the stockpicker at the heart of the company.

 

Rajiv Jain, founder and chief investment officer of GQG, launched the company five years ago after leaving the investment arm of Swiss bank Vontobel, where he helped build client assets from $400 million to $50 billion over two decades.

 

GQG Partners has amassed $US86 billion ($118 billion) in client assets over the past half-decade, including doubling its funds last year alone after a run of outperformance in its portfolios and soaring investor inflows.

 

Now, Mr Jain is seeking to cash in on the group's success, offering Australian shareholders the chance to buy a stake in the company in a deal that values the business at $6.5 billion at the top of the range marketed to investors this week.

 

Mr Jain will enjoy a windfall of $1.1 billion in cash from the listing as he sells a fifth of his holding in the company, bringing his stake to roughly two -thirds, worth $4.5 billion.

 

In total, the offering includes the sale of $1.3 billion in GQG shares, making it the largest IPO of the year on the ASX...

 

The IPO hinges on the hunger of local investors for a rising star in a difficult industry. The active funds management business has endured a prolonged squeeze on fees and a consistent leakage of assets to low cost, passively managed portfolios that track broad indices such as the S&P/ASX 200 and S&P 500 benchmarks.

 

Mounting evidence over the past few decades has proven that, over time, portfolios managed by professionals fail to outpace the broader market once fees are factored in. Many quick-witted portfolio managers may zip ahead of the market for several quarters or years, but almost none consistently outperforms over time.

 

As a whole, the active management industry underperforms the market after fees, Mr Jain said in a letter accompanying the IPO offering documents. Few firms are successful in beating the market over the long term.

 

The endeavour to build a long-term sustaining investment culture is therefore daunting, and there is no assurance we will be successful, he warned.

 

The types of outperformance GQG has enjoyed can prove fleeting. One senior investment executive at a superannuation fund who has dealt with Mr Jain warned that his investing style has suited the equity market over the past few years and risks falling out of favour, denting future returns.

 

The prominence of a star portfolio manager such as Mr Jain, who was named international equity fund manager of the year by Morningstar nine years ago, also creates so-called "key man" risk that has plagued other fund managers with name-brand investors.

 

The 2016 exit of Mr Jain from Vontobel sent the bank share price cratering 11 per cent after the announcement, before recovering to end the day 5 per cent lower. Investors were worried about the impact of Mr Jain's departure on the investment unit's portfolios and ability to attract new money.

 

Rajiv is an exceptional talent, but his talent transcends stockpicking, it translates into teaching and mentoring, said Paul Greenwood, chief executive and CIO of Pacific Current, an ASX listed business that holds a stake in GQG and has agreed to join its board. There is no denying that he is an important figure, but I would put the rest of his team up against any stockpicking organisation.

 

Pacific Current Group was an early backer of GQG, investing $2.7 million early on and will own 4 per cent of GQG common stock following the listing. The value of the stake would be $260 million, or roughly two thirds of the Pacific Current share price, which soared 8 per cent on Friday following news of the GQG listing.

 

The links between Pacific Current and GQG help to explain the decision for the Florida based asset manager to list in Australia. Pacific Current formed from a merger between Australia based Treasury Group and Seattle-headquartered Northern Lights Capital. Tim Carver, the former chief executive of Pacific Current who co-founded Northern Lights, is GQG's chief executive.

 

Another reason for the ASX listing is the attractive valuation comparison to local fund managers, specifically Pinnacle Investment Management and Magellan Financial Group.

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Looking to raise $1.2bill. Shares (priced between $2.00 and $2.20) will go to insto and retail (via ComSec)

 

GQG anticipates further growth in its assets under management will propel its net revenue by a fifth to $547 million in 2022 financial year and help it grow earnings after tax by 15 per cent to $408 million, according to company forecasts.

 

 

Shareholders before and after

Rajiv Jain (co founder) .... prior 86.0% …after IPO 68.8%

 

Tim Carver (co founder) ... prior 7.0% … post 5.6%

 

Pacific Current Group .... ….. prior 5.0% … post 4.0%

 

Employees (other than Tim Carver) .. 2.0% ………. 1.5%

 

New Shareholders ...... currently 0% …… AFTER IPO … 20.1%

Total ….100.0%

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Listing date.... 26 October 2021 #

Company contact details ..... https://gqgpartners.com/

Principal Activities ... Global boutique asset management firm

 

Issue Price ...AUD 2.20

Issue Type ... Chess depository interests

Security code .... GQG

Capital to be Raised .... $1,306,000,000

Expected offer close date .... 26 October 2021

Underwriter.... Not underwritten. UBS AG and Goldman Sachs Australia Pty Ltd (Joint Lead Managers)

 

 

*Retail applications can be through CommSec Broker allocation. Offer looking to open on 15 Oct but for how long will there be some available?

 

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  • 2 weeks later...

Global equities manager GQG Partners will trade on the ASX from Tuesday after securing the biggest IPO in Australia so far this year. GQG Partners raised $1.187 billion to will list with a $5.91 billion market capitalisation.

GQG Partners priced its IPO at $2 a share, which was the bottom of the $2.00 to $2.20 a share price range.

The lead managers, UBS and Goldman Sachs, told clients overnight that the deal was covered at $2.10 a share. However, GQG Partners, which will be majority owned by executive chairman and chief investment officer Rajiv Jain, priced the deal at $2. Jain will retain 68.8 per cent stake on listing.

The raising valued GQG Partners at 16.5 times expected profit for upcoming year to June 30, and implied a 5.5 per cent dividend yield.
 

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