Magellan Financial Group has announced a $275 million capital raising as it prepares to launch a new ASX-listed investment trust.
Shares in the global funds manager were placed in a trading halt ahead of the announcement on Tuesday, which accompanied the firm's full-year results.
Magellan said the placement would strengthen its balance sheet and provide it with flexibility to continue to invest in growth opportunities.
"We have only scratched the tip of an iceberg on the potential of our partnership thinking and I would envisage us making more investments in the future," chairman Hamish Douglass said.
The institutional placement of $55.20 per share represents a 6.0 per cent discount on the dividend-adjusted closing price of $58.72 on Monday, and will be used to help meet the expected costs associated with the Magellan High Conviction Trust initial public offering.
The firm said the new trust will invest in Magellan's "eight to 12 best ideas" and will replicate an investment strategy that has returned 16.6 per cent per annum, net of fees over six years.
The high conviction trust will follow a similar partnership approach to the Magellan Global Trust, which was listed on the ASX in October 2017.
The firm said it would also use $50 million to support a new retirement product, which is currently under development.
Magellan lifted net profit 78 per cent to $376.9 million in the 12 months to June 30, while revenue increased 36.4 per cent to $617.4 million.
Average funds under management increased by 28 per cent to $75.8 billion
The company will pay a final dividend of $1.14 per share, 75 per cent franked, up from a fully franked 90 cents a year ago.
Shares in Magellan have more than doubled in value during 2019 and hit an all-time high of $62.2 on July 31.
MAGELLAN LIFTS FY PROFIT
* Net profit up 78pct to $376.9m
* Revenue up 36.4pct to $617.4 m
* Average funds under management up 28pct to $75.8bn
* Final dividend $1.11 per share, 75 per cent-franked, up from a fully-franked 90 cents a year ago