Q: I am an investor in the Magellan Global Fund (MGF) and I have received an offer to purchase additional units in the fund at a discount. What is the offer and should I consider this?
A: The offer you are referring to is the Magellan Partnership Offer. The offer enables Unitholders in the Magellan Global Fund the opportunity to subscribe for up to $1 of Closed Class Units for every $4 of Magellan Global Fund Units held.
The Partnership Offer is open to Unitholders who were registered holders of Magellan Global Fund units on both the Record Date (8 December 2020) and the Calculation Date (8 January 2021)
Investors who take up their entitlement will receive additional bonus units in the fund worth 7.5% of their subscription and one MGF Option for each Closed Class Unit allotted under the Offer.
Each MGF Option will be exercisable into one MGF Unit with the exercise price set at a 7.5% discount to the estimated net asset value per Unit at the time of exercise. The MGF Options are intended to be quoted on ASX under the ticker MGFO and will have a three year term. The MGF Options will be able to be traded on ASX after allotment and exercisable after three months.
Participation in the offer is optional, and you are under no obligation to purchase any further units. As the bonus units and options are being funded by Magellan Group as opposed to unitholders in the Magellan Global Fund, there is no disadvantage to you in deciding to participate or not. You can apply for all, or a portion, or none of your entitlement.
The MGF Fund is categorised as an International Share fund. The fund invests in approximately 20 to 40 stocks aligned to Magellan’s investment strategy.
In deciding whether to participate or not, you would need to consider your overall investment and cash flow objectives, your current levels of investment in the Magellan Global Fund and how much additional exposure you wish to have to this fund as part of your overall portfolio.
You should read the Magellan Global Fund Partnership Offer PDS to understand the risks and ongoing costs associated with taking up the offer. The offer opened 18 January and closes on 23 February 2021.