Lanyon to list main fund on ASX after strong performance

The boutique fund manager will list its main fund on the ASX after posting five years of strong returns.

Lanyon will list its main fund on the ASX.

Boutique fund manager Lanyon will list its main fund on the ASX in early August, opening it up to a greater pool of investors and providing easier access to liquidity for current holders.

The Lanyon Investment Fund has been operating since September 2019, and has delivered a 20.5 per cent return per year since that time.

“This compares to return of 7.2 per cent for the S&P/ASX300 Accumulation index and 11.6 per cent for the MSCI All Country World net total returns Australian dollar index over that same period,’’ Lanyon, which is headed up by managing director David Prescott, said in a letter to investors.

“The Lanyon Investment Fund is a long-term, value-oriented, high-conviction strategy investing in the most compelling opportunities we can discover, both in Australia and globally.

“We remain unwavering in our commitment to the disciplined application of the approach which we feel will provide the strongest opportunity for sustained investment success.”

The Lanyon Investment Fund previously had a minimum investment of $25,000.

Recent investments include putting 3.4 per cent of the funds’ assets into Frankfurt Airport operator Fraport, which Lanyon believes is still in recovery mode following the pandemic.

“Cash flow has been crimped, primarily due to the €4bn investment on a new third terminal, which we expect to be commissioned prior to the summer of 2026,’’ Lanyon said in its most recent investor update.

“We expect earnings to grow more than 50 per cent towards €2bn in the next five years.

“Our conservative valuation of 10 times EBITDA, implies a near tripling of the share price over that same period.”

Lanyon also likes Mineral Resources, which comprises 8 per cent of the fund’s holdings.

“In the next three to four years, we think Mineral Resources has the potential to more than triple its earnings as growth projects ramp up across the business, enabling a rapid reduction in debt,” Lanyon said.

“We expect the stock to re-rate strongly as management continues to execute and the industry-leading returns we expect from this period of elevated capital spend are realised.”

Lanyon has also bought into Karoon Energy.

“The share price had been very weak following a poorly executed capital raise to fund a large acquisition at a premium valuation, which was subsequently followed by two guidance downgrades,” Lanyon said.

“This weakness was also exacerbated by management commentary that appeared to focus on further growth and acquisitions, whilst deprioritising long-overdue capital returns to shareholders.

“This led to notable pressure from activist investors seeking to address this issue and outlining a clear preference for capital returns over any further value-destructive growth.

“From our engagement with the company, it appears this message is increasingly sinking in, and we eagerly await the announcement of Karoon’s shareholder returns framework in July.”

Lanyon said on July 8 it thought Karoon stock was “exceptionally cheap”.

At the end of June, the fund’s asset value was $152.8m, with capacity for additional investment.

The new ASX-listed securities will be supported by a market maker and will trade close to the net asset value of the fund, “which is a material difference when compared to ASX-listed investment company trading,” Lanyon said.

The fund is expected to list on Thursday.

Lanyon also operates special purpose, single stock funds with a minimum investment of $500,000.

Originally published as Lanyon to list main fund on ASX after strong performance