Update No. 296 – 31/05/17

This blogpost will touch on some administrative issues that will need to be dealt with over the coming weeks and months. It may not be the usual fascinating blog content you’ve come to expect, but especially for existing EGP shareholders, it will be important. I will try to keep the order logical, but there is much detail, so please read to the end, something in here will likely be important for you.

First of all, I should make mention of our newest director. Industry legend Chris Cuffe has joined the board of EGP Capital in the last couple of weeks.

Since word got out about Chris’ involvement with EGP, a veritable flood of new capital has been committed to our Unit Trust once the conversion has been completed. It now appears that our fund will ‘soft-close’ immediately upon its first intake as a Unit Trust. There is still some available capacity, but it is filling fast and will be allocated on a ‘first-come, first served’ basis, there will be no favouritism. Those interested in the presentation should get in touch ASAP.

It was always our intention to ‘soft-close’ the fund at $50m of assets under management (AUM). At that point, we will add no new investors, but existing investors will be able to add to their holdings until we ‘hard-close’ the fund at $100m AUM.

We have formally engaged Fundhost to build the fund and we hope to have the Information Memorandum available within the next few weeks. Depending on various Government Agencies, we hope to have the conversion completed by the end of July and to do our first intake as a Unit Trust in August.

The fund will be known as the EGP Concentrated Value Fund and despite the name change, we’ll basically be trying to do essentially the same thing we have always done, generate the strongest risk adjusted returns we can find available in the markets.

The fund will almost certainly be a Wholesale Trust (though it isn’t yet 100% guaranteed), so we will almost certainly not accept retail investors. This was in order to keep operating costs to a minimum, costs for a Retail fund I estimate would have been about 30 basis points (0.3%) annually, I estimate we will operate the Wholesale trust for a little under 20 basis points annually.

The existing retail investors who have joined us under the small-scale offers exemptions over the past 74 months we hope to roll into the fund (grandfathered is the term I understand), but the exact mechanism for this is still being worked out.

There are potentially some important matters that these retail investors should consider.

The first of these matters is that the minimum investment for the Unit Trust will be $100,000 and the minimum addition and withdrawal will now be $20,000 and any redemption reducing the balance to below $20,000 will be subject to full redemption. This is in order to minimise transactional costs associated with moving funds around as we will now be operating out of ‘custodial’ accounts.

So as a practical matter, any existing investors who would like to add any amounts smaller than the new $20k minimum to their holding should do so either in the May intake (send form and funds by C.O.B Friday June 2nd) currently underway, or in the June intake, which will see our final shares as a Pty Ltd company issued on 1 July 2017.

We have commitments from our final group of retail investors who will join us on July 1st and unfortunately, we will be accepting no further retail money.

Another thing for existing investors to be aware of is that due to the transfer of registry, all existing investors will need to complete a new application form, so that Fundhost have all the relevant details they need. As soon as the appropriate form is available, I will send one to all existing investors.

Finally, the FY2017 dividend was paid today. There were 5 investors who took their dividend as cash, with the remainder amounting to 97.7% of the company’s stock reinvested in new shares. Dividend statements will be issued over the next couple of days, they should be retained for taxation purposes – Tony Hansen 31/05/2017

Apr 1st2011 Jun 30th2016 Current Price Since July 1st 2016 Since Inception Annualised
EGP Fund No. 1 1.00000 1.70130 1.9407*1 19.95%*1 152.11%*2 16.18%*2
Benchmark 37333.23 52006.69 60167.32 15.69% 61.16% 8.05%

*1 after a 31 May 2013 dividend of 2.333 cents per share (cps) plus 1.000 cps Franking Credit, a 31 May 2014 Dividend of 7.000 cps plus 3.000 cps Franking Credit, a 31 May 2015 Dividend of 8.6667 cps plus 3.7143 cps Franking Credit, a 31 May 2016 Dividend of 6.0000 cps plus a 2.5714 cps Franking Credit and a 31 May 2017 Dividend of 7.000 cps plus 3.000 cps Franking Credit

*2 calculated based on dividends reinvested

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