MAGELLAN GLOBAL EQUI

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ASX:MGE - Presentation in relation to restructure proposal

08/05/2020 | 12:27am

5 August 2020

ASX Limited

ASX Market Announcements Office

Exchange Centre

20 Bridge Street

SYDNEY NSW 2000

MAGELLAN ASSET MANAGEMENT LIMITED

PRESENTATION IN RELATION TO RESTRUCTURE PROPOSAL

Please see attached a presentation regarding the proposal by Magellan Asset Management Limited to restructure three of its existing Global Equities retail funds as announced to ASX on 3 August 2020.

Authorised by

Marcia Venegas | Company Secretary

Global Equities fund restructure

August 2020

Important information

This presentation ('Presentation') has been produced by Magellan Asset Management Limited ('Magellan') ABN 31 120 593 946, AFS Licence No 304 301. Units in any funds referred to in the Presentation are issued by Magellan. This material has been provided for general information purposes and must not be construed as investment advice. This material has been prepared without taking into account the investment objectives, financial situation or particular needs of any particular person. Investors should consider obtaining professional investment advice tailored to their specific circumstances and should read the relevant Product Disclosure Statement (PDS) or any applicable explanatory memoranda prior to making any investment decisions. The PDS is available via www.magellangroup.com.au. This Presentation does not constitute a part of any offer document issued by Magellan. The information contained in this Presentation may not be reproduced, disclosed, or provided to any third party, in whole or in part, without the prior written consent of Magellan. Statements contained in this Presentation that are not historical facts are based on current expectations, estimates, projections, opinions and beliefs of Magellan. Such statements involve known and unknown risks, uncertainties and other factors, and undue reliance should not be placed thereon. Additionally, this Presentation may contain "forward-looking statements". Actual events or results may differ materially from those reflected or contemplated in such forward-looking statements. None of Magellan or any of its respective officers or employees has made any representation or warranty, express or implied, with respect to the correctness, accuracy, reasonableness or completeness of any of the information contained in this and they expressly disclaim any responsibility or liability therefore. No person, including Magellan has any responsibility to update any of the information provided in this Presentation. Implementation of the restructure contemplated in this presentation remains subject to a number of conditions, including regulatory approvals from ASIC and the ASX, obtaining judicial advice, approval by unitholders in the relevant funds at meetings of unitholders and delivery of independent expert's reports in respect of the trust schemes.

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Introduction

  • Magellan Asset Management ("MAM") has announced a proposed restructure of three Global Equities retail funds into a single trust that has two unit classes - Closed Class & Open Class
  • The restructure will involve:
    • A unitholder vote to amend the Magellan Global Fund's ("MGF") constitution to facilitate the restructure
    • Two separate trust schemes with MGF making an offer to acquire 100% of the units in Magellan Global
      Equities Fund ("MGE") and Magellan Global Trust ("MGG") on a NAV-for-NAV basis
    • MGF's new Closed Class Units to be listed and subject to Listing Rules and Open Class Units to be quoted subject to the AQUA Rules
  • Post implementation, MGF intends to undertake a 1-for-4 entitlement offer and issue of bonus options:
    • All discounts will be funded by Magellan Financial Group
  • The restructure is subject to approval by ASX, ASIC, the Courts and unitholders of MGF, MGE & MGG
  • Working towards unitholder meetings in Q4 2020

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The journey to today

March 2015

Pioneers Active ETFs allowing investors to access actively managed investment strategies via the stock exchange

October 2019

Lists second closed- ended trust, offering partnership benefits

Today

Development of a dual class, single

2015

2016

2017

2018

2019

2020

October 2017

May 2016

June 2020

Introduction

First partnership

Develops the next

of AMIT1

benefits offered

generation Active ETF

regime

within closed-

bringing together the

ended trust with

features of an unlisted

Magellan Global

fund and Active ETF into a

Trust listing

single unit in a single fund

trust, allowing access

to Magellan's

Global Equities

strategy via multiple

channels

Our innovations are centred on delivering investors greater access

and choice in how to invest with reduced friction

1. Attribution Managed Investment Trust

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MGF post restructure

Magellan Global Fund

(existing registered managed investment scheme)

Closed Class

Open Class

(subject to ASX Listing Rules)

(subject to AQUA Rules)

Direct

investors

On-market

On-market

Applications

investors

investors

& platforms

  • Constitution of MGF to be amended to provide for two unit classes - Closed Class and Open Class
  • Familiar regulatory frameworks apply to the operation of each unit class:

―ASX Listing Rules apply to Closed Class

―ASX AQUA Rules apply to Open Class

  • The Open Class will allow investors to access on ASX or apply / redeem directly off market with the Responsible Entity (single unit model)
  • Unit classes managed to ensure that activities in one unit class do not impact the other unit class

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Trust features summary

Magellan Global Fund

Closed Class

Open Class

Access

ASX (Official List / Listing Rules)

ASX (AQUA Rules)

Direct applications/redemptions off market with RE

Responsible Entity and

Magellan Asset Management Limited

Investment Manager

Investment mandate

Global Equities strategy (i.e. identical for both unit classes)

NAV / Unit Pricing

A NAV per Unit will be calculated for each unit class

Distributions

Target cash distribution yield of 4% p.a. paid semi-annually

Replicates MAM's existing LITs and Active ETFs:

Daily NAV per Unit by 9.30am for each unit class

Disclosure / transparency

Intra-day indicative NAV (iNAV) for each unit class

Monthly fund factsheets with Top 10 holdings with investment performance (post fees)

calculated for each class

Portfolio disclosed quarterly with two-month delay

Fees

Fee structure identical across each class in MGF

Capital management

Ability to conduct on-market buyback1

Provision of liquidity by MGF

DRP

Units issued at 7.5% discount to the Closed Class NAV per Unit

Units issued at the Open Class NAV per Unit

(Discount to be funded by Magellan Financial Group)

1. Subject to MAM Board approval and Listing Rules

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Key investor benefits

  • Greater flexibility in entering and exiting the Open Class Units
  • Greater liquidity in the Open Class Units
  • Enhanced transparency for all unitholders with units traded on ASX and identical disclosure across unit classes
  • Potential for improved secondary trading market in Closed Class Units - establishing open and closed-ended unit classes over the same investment portfolio removes
    "basis risk" between the two unit classes
  • Offering Global Equities strategy via one trust with different access points, rather than a separate trust for each access point
  • Opportunity to receive partnership benefits

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Restructure key terms

  • Unit-for-unitwith exchange ratio on a NAV-for-NAV basis
  • Investors will have an equivalent unit in MGF, both in value and fundamental rights
  • Members of each fund are required to approve resolutions to effect the restructure
  • Member meetings expected to be held in Q4 2020. A notice of meeting and explanatory memoranda will be sent to unitholders in advance of the meetings which will include an
    Independent Expert's Report
  • All transaction costs to be paid by Magellan Financial Group, not the trusts or unitholders

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MGF post restructure

IF IMPLEMENTED CURRENT STRUCTURE

POST IMPLEMENTATION

MGG

MGE

MGF

MGF

($2.3bn)

($1.7bn)

($11.6bn)

($15.6bn)

Closed Class

Open Class

($2.3bn)

($13.3bn)

Receive

Receive

Continue holding

Closed Class

Open Class Units

Open Class Units

Units in MGF

in MGF

in MGF

Direct

investors

On-market

On-market

Applications

investors

investors

& platforms

Actual funds under management will change over time and the amount may be more or less at the time of implementation

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Entitlement offer & option issue

MGF is committing to undertake an entitlement offer, subject to implementation of the restructure

and certain regulatory approvals

Entitlement offer

Entitlement of $1 of Closed Class Units for every $4 of MGF units (Closed Class and Open Class)

Offer price set at the NAV per Closed Class Unit on or around the allotment date

plus attached

- Successful applicants will receive partnership benefits in the form of additional Closed Class Units

bonus option

worth 7.5% of their subscription

made to all MGF

- Successful applicants will also receive one (1) Bonus Option for each Closed Class Unit issued

unitholders

Magellan Financial Group will fund the partnership benefits to minimise dilution

Timetable expected to commence January 2021

Further details will be in the explanatory memoranda and a PDS to be prepared for the Offer

Bonus options to

Closed Class unitholders will be eligible to receive one (1) bonus option for every two (2) Closed Class

Units held on the record date

Closed Class

Record date to be set, subject to ASX approval, on or around the allotment date of new Closed Class

unitholders

Units issued under the entitlement offer

No transaction

All transaction costs to be paid in full by Magellan Financial Group

costs

The Entitlement Offer and issue of bonus options are subject to the successful implementation of the Restructure and regulatory approvals. A product disclosure statement ('PDS') will be lodged with ASIC by Magellan Global Fund, as issuer, and made available to Eligible MGF Unitholders at the time the Entitlement Offer is expected to be made in January 2021. Once available, Eligible MGF Unitholders will need to consider the PDS in deciding whether or not to subscribe for Closed Class Units and options in the Magellan Global Fund. Record dates for participation will be set, in consultation with the ASX, at the time the Entitlement Offer is formally undertaken.

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Key option terms

  • Exercise ratio: one (1) Closed Class Unit to be issued on exercise
  • Exercise price equal to 92.5% of the prevailing NAV per Closed Class Unit at the time of exercise
  • Daily exercise, commencing after an initial exercise hold period with expiry three years from issue date
  • Quoted on ASX (subject to ASX approval)
  • Magellan Financial Group to pay the 7.5% discount to the prevailing NAV per Closed Class Unit on exercise

The Entitlement Offer and issue of bonus options are subject to the successful implementation of the Restructure and regulatory approvals. A product disclosure statement ('PDS') will be lodged with ASIC by Magellan Global Fund, as issuer, and made available to Eligible MGF Unitholders at the time the Entitlement Offer is expected to be made in January 2021. Once available, Eligible MGF Unitholders will need to consider the PDS in deciding whether or not to subscribe for Closed Class Units and options in the Magellan Global Fund. Record dates for participation will be set, in consultation with the ASX, at the time the Entitlement Offer is formally undertaken.

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Illustrative example of restructure, entitlement offer and bonus options

With $10,000

Under the proposed

Entitlement offer plus attached option

Bonus Options

invested in...

restructure they will…

.

(assuming unit balance of $10,000

on the Calculation Date)

Continue to hold $10,000

Entitlement to subscribe for $2,500 of

Not eligible

MGF

(unless they buy Closed Class Units

MGF units (Open Class Units)

Closed Class Units

prior to the record date)

MGE

Receive $10,000 of

+ $187.50 of additional units funded

Not eligible

by Magellan (i.e. 7.5%)

(unless they buy Closed Class Units

Open Class Units in MGF

prior to the record date)

Receive $10,000 of

+ 1 Bonus Option for every Closed

1 Bonus Option for every 2

MGG

Class Unit issued under the Offer

Closed Class Units held

Closed Class Units in MGF

(Must hold units on the record date)

This is an illustrative example only and it is not a forecast. This example assumes that unitholders are on the

relevant unit register on the relevant record dates and that, in relation to the entitlement offer, they have submitted valid subscriptions. Additionally, the example assumes that all necessary unitholder approvals, regulatory approvals and judicial advices have been obtained.

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Summary

    • MAM has announced a restructure that is expected to deliver benefits to investors in MGF, MGG and MGE
    • Directors have recommended the restructure to unitholders*
    • Explanatory memoranda to be sent to unitholders ahead of unitholder meetings in Q4 2020
    • Restructure implemented shortly thereafter
    • Capital raising timetable expected to commence in January 2021
    • Implementation of the restructure remains subject to a number of conditions, including regulatory approvals from ASIC and the ASX, Court approval, approval by unitholders in the relevant funds at a meeting of unitholders and delivery of independent expert's reports
  • In the absence of a superior proposal and subject to the recommendation of the Independent Expert in the Independent Expert Report.

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www.magellangroup.com.au Phone: +61 2 9235 4888

Disclaimer

Magellan Global Equities Fund published this content on 05 August 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 05 August 2020 04:26:03 UTC

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