Australia’s oldest listed investment company, Australian Foundation Investment Company (AFIC), is considering buying back its own shares to try to reduce the discount that they are trading at to net tangible assets (NTA).
Chief Executive Officer and Managing Director Mark Freeman said AFIC was trading at a discount to NTA, like the vast majority of LICs, with the gap being 12% at 30 June.
He said AFIC conducted an on-market buyback earlier this this year to neutralise the earnings dilution of its dividend reinvestment program.
“It's probably something that we could consider this time around again if we go to a very large discount. So that's always open for discussion,” Freeman said on a webcast to discuss its 2025 financial year results.
Earlier AFIC announced a 3% drop in net profit to A$285.0 million (US$187.6 million) on revenue from operating activities which eased 1.9% to $328.1 million in the 12 months to 30 June 2025.
Freeman said AFIC swung from trading at a huge discount to NTA to a huge premium during the COVID pandemic.
“But you can see back to the slide over the long term, it does tend to trade closer to fair value,” he said.
Freeman also said AFIC, which has a small part of its portfolio invested offshore, had been doing preparatory work on whether to launch an international fund using the same investment principles.
“We think the time is right. So we still have great confidence in the process and how we're handling at this point. We still feel like there's good market demand for a low-cost, no performance fee, low turnover, international product,” he said.
“We think that's still very valid in this market, and so we still feel comfortably building towards that.”
AFIC shares closed nine cents (1.2%) higher at $7.58, capitalising the company at $9.51 billion.
