KUALA LUMPUR (July 15): M&A Value Partners Asset Management Malaysia Sdn Bhd, the firm owned by M&A Equity Holdings Bhd and Value Partners Group Ltd, has launched the M&A Value Partners IPO Equity Fund (IPOEF).

IPOEF is an actively managed fund that invests in equities, or equity-related securities of Malaysian companies with a potential catalyst for re-rating over the short- to medium-term resulting from corporate actions such as IPO and pre-IPO exercises, takeovers, merger arbitrage, strategic spin-offs and other corporate exercises.

Sean Yap Shon Leong, CEO of M&A Value Partners, highlighted several reasons for the fund being focused on IPOs. For one, IPOs have yielded investors with attractive returns since 2020, on average.

During a press conference last Friday, Yap said investors can also diversify their bets with IPOs as companies that are publicly listed in recent years operate in different industries. Liquidity is also not an issue.

“We study every deal independently and we know what to invest in and what not to. There are enough stocks to pick and choose from,” he says.

The fund also allows up to 20% asset allocation in unlisted securities for pre-IPO opportunities.

“I think if we go in at the pre-IPO level, the alpha generation would be multiple times higher than the IPO stage. But I do not want to have too high of an exposure because unlisted securities are illiquid,” explained Yap.

Notably, the fund’s portfolio will be concentrated, and at any time, will comprise not more than 20 companies, according to its information memorandum. It is benchmarked against an absolute return of 8% per annum.

The fund charges investors a performance fee of 20% above the hurdle value during a particular performance period. The hurdle value is “determined by adding the hurdle rate of 8% per annum to the closing net asset value (NAV) per unit on the last business day of the preceding performance period, after subtracting any income distribution declared”, according to the information memorandum.

The fund’s sales charge is up to 5% of the NAV per unit and the annual management fee is 1.75% per annum.

There is no redemption fee if the investor redeems units after 12 months of each of their purchase applications. However, there is a redemption fee of 1% if the redemption request is made within 12 months of each purchase application.