MA’s net profit surged 93 per cent to $12.1 million in the June half, as net inflows of $506 million in the asset management division lifted assets under management to $6.1 billion and drove base management fees up 28 per cent.
MA owns more than 44 per cent of listed pub group Redcape Hotel Group (RDC) through its various funds, and wants to delist Redcape to turn it back into an unlisted fund. It will give investors three choices: retain their stake; sell out at $1.15 (a 22 per cent premium to Redcape’s previous close); or participate in a rights issue at the same price.
An independent committee of the Redcape board has backed the move, but MA won’t be able to vote its stake and MA’s co-chief executives, Chris Wyke and Julian Biggins, stress they’re not looking to force anyone’s hand.
The move – and indeed, the strong flows into MA’s asset management business – speaks to what the pair see as the split in the Australian market between public and private capital.
Biggins says the rise and rise of passive investing in equity markets has made it harder and harder for the fundamental, long-term value in smaller companies to be recognised.
“We all acknowledge that the big get bigger and there’s a higher hurdle for small companies to get over, just to get on the field,” he says.
But MA’s client base of local and offshore high net-worth individuals, who are chasing wealth preservation and steady returns, are prepared to take a different view that is arguably more suited to private markets.
“There’s a lot of capital floating around that has a 10-, 15-, 20-year view,” Biggins says. “And that’s very different from the public markets.”
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