Mobius Capital Partners has raised £100m ($75.9m, €85m) to float its new investment trust, falling short of its £200m target and bringing into question how it can outshine the founding partners’ former firm, Franklin Templeton.
The firm announced today that it will issue 100 million shares at £1 per ordinary share when it floats the Mobius Investment Trust on the London Stock Exchange on 1 October.
Mark Mobius (pictured), partner of Mobius Capital Partners, thanked shareholders for their support in the “successful IPO of Mobius Investment Trust”.
He added: “This represents a solid endorsement of our strategy, given the challenging sentiment towards emerging and frontier markets. We now look forward to capitalising on the significant investment opportunity that exists in our target markets.”
Mobius, along with founding partners Carlos Hardenberg and Greg Konieczny and other employees, have contributed approximately £5.7m to the trust.
The annual management fee is 1%, reducing to 0.85% above £500m and 0.75% above £1bn, based on the NAV or market cap of the trust. There will be no performance fee and the trust’s AUM will be capped between $1.3bn and $1.5bn.
Maria Luisa Cicognani, chairman of the Mobius Investment Trust, said: “We are encouraged by the positive response from a broad range of institutional and retail investors to our initial public offering. The board and I look forward to working closely with the highly experienced investment team at Mobius Capital Partners.”
Edge over competitors
Tilney managing director Jason Hollands said there has been a degree of scepticism in the market about what edge the new business might have over and above what the team was able to achieve at Franklin Templeton.
In addition, he said raising money for a new emerging and frontier market investment fund in the current turbulent environment was always going to be a challenge.
“These markets have endured a perfect storm in recent months, rattled by the escalating US-China trade war, pummelled by a strengthening US dollar and compounded by a slew of idiosyncratic problems in countries such as Turkey, Argentina and South Africa.”
Willis Owen head of personal investing Adrian Lowcock said the timing of the launch will not have helped as the asset class is currently out of favour and investors often adopt a wait-and-see approach to emerging markets before investing.
Lowcock also said given the uncertainty and volatility around emerging markets, there is no advantage to buying a trust at launch.
“Mobius’ age is likely to cause some concern for investors, particularly as this is a new fund launch and the business doesn’t have the same depth as Templeton,” he added.
A wad of cash and depressed stocks
But Hollands noted the currently unloved status of emerging markets has pushed share price valuations down to cheap levels which could present opportunities.
“For those investors who have put £100m of their cash behind the new Mobius Investment Trust, only time will tell whether this has proved a shrewd move,” he said. “The Mobius team are starting with a clean sheet of paper and a wad of cash to deploy in a market of depressed stock prices – that’s not such a bad place to be in.”
Fighting talk
Earlier this month, Mobius and founding partners Hardenberg and Konieczny said they were in “attacking” mindset ahead of the launch, stating they would not tolerate a discount or momentum playing hedge funds as shareholders.
To avoid a discount position, the trust has a policy that offers investors the ability to redeem their shares at NAV, less costs, after four years and every three years after that.
It also has a 14.99% share repurchase authority that directors will consider activating where an average one-month discount exceeds 5%. This will be at the board’s discretion within normal market conditions.
The team believes these measures should stop the trust trading at a discount to NAV and discourage any potential arbitrageur activity from driving down the share price.
