GQG - GQG Partners Inc

[Dona Ferentes]

GQG Partners Inc (GQG) is a fund manager looking to list on the ASX in 2021, in what is slated 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.

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.

As well, Paul Greenwood, current chief executive and CIO of Pacific Current, has agreed to join the GQG board.

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.

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.

The float is looking to raise $1.2bill. Shares (priced between $2.00 and $2.20) will go to institutions and retail (via CommSec)

Shareholders ................. before ....... and after IPO
Rajiv Jain (co-founder) .......... prior 86.0% ..…after 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%

 

[Dona Ferentes]

Star stockpicker primes billion-dollar ASX payday

QUOTE
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 multi-billion 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".
END

 

[Dona Ferentes]

Listing date	26 October 2021 #
Company contact details	https://gqgpartners.com/ Ph: +1 (754) 218-5500
Principal Activities	Global boutique asset management firm
GICS industry group	TBA
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)

 

[Dona Ferentes]

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 company’s 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.

CIO Tim Carver said the business would put a real value on its shares. It chose to list on the ASX because of its links to the market – Pacific Current Group was an original backer of the business and AustralianSuper was its first institutional client. It will also give GQG the opportunity to further grow funds in the local market, he said.

“By listing we now have a currency to deepen alignment of our team with shareholders, to give our team equity that has real transparent market validated value, and is a real competitive weapon in thinking about recruiting and retaining the intellectual property that really drives our business,” Mr Carver said.

Both Mr Carver and Mr Jain will invest their IPO proceeds in the underlying funds alongside clients with a seven-year lock-up. Mr Carver said that alignment was essential to the firm’s success.

“The litmus test of an investment firm is whether the team is invested in their own products. It’s that combination of a real focus on investments, and that we charge less than legacy asset managers, that’s the combination that has been immensely powerful,” he said.

 

[Dona Ferentes]

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

The company’s 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.

Smart team.

GQG listed today; opened at $2.11, the usual mad rush to discover where the pricing will lie, which took it to 2.13 and down to 2.05 in the first minute.... . Now trading around $2.08; a premium but no real stag.

 

[dyna]

Bought ten grand worth at $1.95 . Will have to wait and see where this one goes. It's still early days .....how does that old sharemarket adage go ? " being early is just as bad as being wrong" ...oops!

 

[Dona Ferentes]

Bought ten grand worth at $1.95 . Will have to wait and see where this one goes. It's still early days .....how does that old sharemarket adage go ? " being early is just as bad as being wrong" ...oops!

at listing, there were 8 institutions each holding >1% of total shares and there were 3,918 shareholders.

Another way to look at it; with around 20% as free float (assume Jain holds onto his 68,8% and Carver his 5.6%) then 20.5% is now with insto's (including Pacific Current?) then there is very little with retail. Not one for indexes with so little free float, but then there is leverage on results, both ways.

 

[Dona Ferentes]

GQG falling off its perch .... down most of today to as low as $1.845

 

[Dona Ferentes]

GQG falling off its perch .... down most of today to as low as $1.845

the perch is a bar, and the bar got lower. ... and lower. GQG went sub $1.60 in the week leading up to Xmas, with a slight rebuild to close the CY at $1.76.

The Magellan story of late (loss of mandates, fund outflows and key person risk) has likely taken the gloss of GQG, as would the rise and rise of cheaper ETFs.

 

[Dona Ferentes]

the perch is a bar, and the bar got lower. ... and lower. GQG went sub $1.60 in the week leading up to Xmas, with a slight rebuild to close the CY at $1.76.

The Magellan story of late (loss of mandates, fund outflows and key person risk) has likely taken the gloss of GQG, as would the rise and rise of cheaper ETFs.

and GQG out with good FUM inflow numbers, higher than the 6 monthly pro forma from the PDS. so the market has possibly decided its not all gloom. Back up to $1.88 .... Just don't mention Magellan

Le roi est mort, vive le roi!

 

[dyna]

Bought my 2nd ten grand parcel of GQG at $1.50 .
Might be a long wait for this one to come good. Just have to wait and see, now.

 

[Dona Ferentes]

For the quarter we experienced net inflows of US$3.4B (and now at $92B), despite an extremely challenging macro environment. We continue to see business momentum across multiple geographies and channels as our Q1 flows represent positive net flows from all three of our major channels and positive net flows from multiple geographies, notably in the Australian and Canadian retail channels.

As in prior periods, we note that our management fees (fees that are a percentage of assets managed) as opposed to performance fees (fees linked to investment performance) continue to comprise the vast majority of our net revenue. As the largest shareholders in GQG, our management team remains highly aligned with all shareholders.

but still well under the IPO issue price.

 

[Dona Ferentes]

For the quarter, we experienced net inflows of US$2.8B. We are pleased with this result against a backdrop of continued industry outflows, and overall negative market returns. We continue to see business momentum as our Q2 flows represent positive net flow from multiple geographies and channels.

still coming out with cheery, upbeat narrative. But its hard when the valuations take FUM lower; down to $86.7bill in June versus $94.6B in May.

The SP reflects this, from $1.70 a month ago to $1.31 today

 

[Garpal Gumnut]

still coming out with cheery, upbeat narrative. But its hard when the valuations take FUM lower; down to $86.7bill in June versus $94.6B in May.

The SP reflects this, from $1.70 a month ago to $1.31 today

I believe GQG's narrative is " We are not losing as much as MGF ".

The AFR spruikers suggest some funds are migrating from the latter to GQG.

gg

 

[Dona Ferentes]

maintaining FUM is no fun:

At the same time, we have continued to see equity de-risking among institutional clients and “tax-loss harvesting” among retail clients, which have driven higher outflows during the quarter. In particular, the recent extreme volatility in gilts and currencies contributed to gross outflows of roughly US$1.5 billion from our UK domiciled clients..."

 

[Garpal Gumnut]

maintaining FUM is no fun:

The phrase that best describes the massive outflow of funds in this announcement is “weasel words “.

Poor investors in a “Black Knight”.

gg

 

[Dona Ferentes]

While Magellan is sliding with the snakes, fund manager GQG Partners shares has lifted close to 6 per cent after it reported a $US5.6 billion ($8.4 billion) boost to its funds under management for the month of June.

Total funds under management was at $US104.1 billion, up from the $US98.5 billion recorded in May.

 

[finicky]

A fund manager where everything is up, Nov compared to October - fum and inflows.
Year to date netflow also up.
If interested check out the ROE that this monster pulls. Although P/B is also >9 times. And high yield is unfranked with the mothership listed in Delaware USA.
Another recc from a while back by Greg Canavan. For one thing he likes exposure to the absence of climate changing policy in 'emerging markets' which is one of GQG's p/fs.

Not Held
Considering

 

[Boggo]

I'm surprised that this stock doesn't get more of a mention. (I do hold).

 

[finicky]

A target for me in a crash. Doesn't get any airplay it seems - only place I've heard it mentioned was Greg Canavan's fat tail service. Chart strong, new high today, but has got away from bottom pickers.

Not Held

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