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Highlights
- Spheria Emerging Companies (SEC) remains a listed investment company (LIC).
- A proposal to convert shares into units of another fund did not meet its necessary conditions.
- Strong portfolio performance and reduced NTA discount contribute to a positive outlook for the company.
Spheria Emerging Companies (ASX:SEC), a prominent listed investment company (LIC), will continue its journey as a publicly traded entity after a proposal to exchange its shares for units in the Spheria Australian Smaller Companies Fund did not fulfill the required conditions. The company made this announcement on January 7, 2025, affirming its commitment to its current structure.
This comes after Spheria highlighted a prolonged issue that has affected its performance since its initial public offering (IPO) in December 2017. The company has been trading at a discount to its net tangible asset (NTA) per share, despite achieving strong portfolio performance. From its IPO date until December 31, 2023, Spheria reported an impressive 2.8% annual outperformance compared to its benchmark, showing that the company’s portfolio was performing well. Nevertheless, the persistent NTA discount left some shareholders frustrated, as they felt the market value of their shares didn’t reflect the true worth of the company’s assets.
In response to this, Spheria, in partnership with Spheria Asset Management, proposed a plan to address the ongoing NTA discount. The plan was contingent on the average NTA discount of Spheria shares being greater than 5% during the period from October 1 to December 31, 2024. If the condition had been met, shareholders would have been able to exchange their shares for units in the Spheria Australian Smaller Companies Fund.
However, the average NTA discount for this period was calculated at 4.75%, meaning the proposal did not come to fruition. Despite this, Spheria has expressed satisfaction with the significant improvement in the NTA discount over 2024, as well as the company’s strong investment performance. For the year ending November 30, 2024, the company posted a return of 22.6%, outperforming its benchmark by 2.7%.
Looking ahead, Spheria’s board will continue to evaluate options to further enhance shareholder value and assess whether any additional measures are needed to address the NTA discount. Spheria Emerging Companies will also continue its regular payment of fully franked dividends, providing investors with consistent returns.
Spheria Emerging Companies remains focused on delivering long-term capital growth and diversification for investors through its actively managed portfolio of Australian and New Zealand small and micro-cap companies.
