Who Is The Future Generation Investment Company?
Owen Raszkiewicz | Jul 19, 2015 17:57
I cannot claim credit for the find, but must admit, Future Generation Global Investment Company Limited (ASX: FGG) first came across my desk late last month, thanks to a former Motley Fool writer, Mark Tobin.
Who is FGG?
FGG is a soon-to-be listed internationally focused listed investment company or LIC.
It has dual-listed mandates:
1. To make money for shareholders over the long-term by offering diversified exposure to global equities (stocks) through some great fund managers; and
2. Help to improve the lives of Australian youths suffering from mental health issues
Facts about Youths and Mental Health in Australia
According to an interview I recently saw with FGG's Co-CEO, Chris Donohoe, suicide is the number one killer of Australian youths, and – shockingly – 33,000 children are currently homeless in Australia. Yes, 33,000!
FGG's charitable mission is to: "Help improve the lives of young people with mental health issues by providing financial support to Designated Charities."
The above quote was taken from the company's prospectus, which can be found .
Here're some other facts from the prospectus:
· Nearly half (45%) of all Australian's will experience a mental health problem
· 20% will do so in any given year
· Adolescences and young adults are most at risk, with 75% of mental problems first appearing before age 25%
It is expected FGG will donate an amount equal to 1% of company's average monthly net tangible assets to the charities in any given financial year.
Who's running this thing?
There are two co-CEO's of FFG: Chris Donohue, who's a highly experienced financial professional; and Louise Walsh, who is a lawyer by trade and has been a leader in Australian philanthropy over the past 15 years – she is currently CEO of Philanthropy Australia.
Ms Walsh will, however, resign from her role once the company is floated on the ASX.
Obviously, it's no coincidence that the company has two mandates and two highly experienced CEOs in applicable fields.
Belinda Hutchison chairs the company. Ms Hutchison is Chancellor of the University of Sydney, a director of AGL Energy Ltd (ASX:AGL)and Australian Philanthropic Services, and was previously the Chair of Qbe Insurance Group Ltd (ASX:QBE) and director of Telstra Corporation Ltd. (ASX:TLS).
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Despite no one on the board being paid for their work, there are many noteworthy directors and senior managers in the team. However, particular mention must go to Geoff Wilson. Mr Wilson is Australia's chief LIC guru, with three of his funds currently listed on the ASX:
· Wam Capital Ltd (ASX:WAM)
· WAM Research Ltd (ASX:WAX)
· Wam Active Ltd (ASX:WAA)
He is also chairman of the Australian Stockbrokers Foundation.
Mr Wilson is a director of FGG and will be a member of the investment committee.
WAM participants and FGX shareholders (see below) will receive a priority allocation in the FGG offer.
Many brokers will be donating any transaction costs from the purchase of FGG shares back to charity.
What will FGG do?
FGG is the first internationally focused LIC of its kind.
The first dual-mandated LIC, Future Generation Investment Company Ltd (ASX:FGX), has been on the ASX for months, but was a roaring success. In fact, it had to close its doors to investors early because it was so popular. FGG may well do the same.
FGG is seeking to raise $550 million from investors. Then, select global fund managers invest this money. Many of these fund managers may not ordinarily be accessible to everyday Australians.
On average, the 20 global fund managers who've offered to work with FGG charge an average management fee of 1.3% and an average performance fee of 16%. However, the fund managers have "agreed to forgo ALL performance and management fees," according to the prospectus .
So the basic principle is this:
1. Investors buy units in FGG, at the price of $1.10 each
2. FGG invests that money with global fund managers under the direction of the FGG investment team.
3. The fund managers do their bidding for nothing
4. FGG hopes to pay 1% p.a. of assets to charities
5. Investors benefit from low management fees
6. Investors get global exposure from professional money managers
7. Investors hopefully get dividends and capital gains on your investment; and, best of all,
8. Investors get to give something back to the community
As an aside, ASX Ltd (ASX:ASX) – Australia's premier securities exchange - has decided to waiver FGG's listing fees.
Risks
Of course, whenever you're investing money in anything there is always a risk.
As FGG's prospectus reads: "The performance of the Company will be dependent on the Company’s ability to invest with Fund Managers that produce positive performance results and forgo Management and Performance Fees. Investors should also be aware that the investment universe available to the Company is extremely broad in terms of asset class and investment styles and strategies and, as at the date of the Prospectus, the initial Portfolio has not been determined."
How to get involved
According to the prospectus, the minimum amount of shares and options is 2,000 – at $1.10. Anything larger than the minimum must be done in increments of 100 shares. The prospectus contains a guide on how interested investors can get involved in the FGG initial public offering (IPO).
Owen Raszkiewicz does not have a financial interest in any company mentioned in this article. He welcomes your feedback.
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