Wilson Asset Management is expecting an increase in capital markets activity, particularly acquisitions, as the Reserve Bank of Australia starts to roll out interest rate cuts.
Following a five-year hiatus, the RBA announced on Tuesday (18 February) it will cut rates by 25 basis points to 4.1%.
“We foresee increased capital markets activity, creating opportunities for companies to pursue accretive acquisitions and capital management strategies, including initial public offerings,” Lead Portfolio Manager Oscar Oberg says.
The comments follow results of the first-half 2025 financial year performance of the investment firm’s WAM Active (ASX:WAA) portfolio, which includes investments in mining services companies SRG Global (ASX:SRG) and NRW Holdings (ASX:NRW).
According to Wilson Asset Management, which has just shy of $6 billion in funds under management, the portfolio outperformed the market for the six months to 31 December 2024, increasing 17.5%.
The portfolio also outperformed the Bloomberg AusBond Bank Bill Index (Cash) by 15.2% and the S&P/ASX All Ordinaries Accumulation Index by 10.6%.
For the full 2024 calendar year, the WAM Active portfolio increased 32.5%, outperforming the Bloomberg AusBond Bank Bill Index (Cash) by 28% and the S&P/ASX All Ordinaries Accumulation Index by 21.1%.
The outperformance contributed to a 34.9% increase in Wilson Asset Management’s operating profit before tax to $7.6 million and a 33.2% increase in operating profit after tax to $5.4 million for the first half of the 2025 financial year.
This has prompted the investment firm to declare a fully franked interim dividend of $0.03 per share, representing an annualised fully franked dividend yield of 6.8% and a grossed-up dividend yield of 9.7% including the value of franking credits.
“WAM Active’s flexible cash mandate and active investment process enables the team to navigate a wide range of market conditions, regardless of the economic environment,” Oberg says.
“Using the proven market-driven investment process, the team are positioned to capitalise on opportunities as they emerge, including corporate actions such as takeovers and restructures, capital raisings, block trades and discount to assets arbitrages.”
The aim of the WAM Active portfolio, which holds $66.6 million in assets, is to deliver a regular income stream via fully franked dividends, provide a positive return with low volatility and preserve capital.
The value of the WAM Active portfolio’s net tangible assets per share before tax was $0.86 per share as of the end of January 2025.
Dividends paid out by the portfolio since inception total $1.41 per share.
The breakdown of the WAM Active portfolio includes 31.5% financials, 19.1% industrials, 2.9% materials and 0.5% energy.
Sydney-based WAM was established in 1997 by Geoff Wilson AO and manages 11 listed investments for over 130,000 investors.
Write to Angela East at Mining.com.au
Images: NRW
