Capital Dynamics Asset Management’s Formal Response To The Accusations Made By Laxey Partners
Capital Dynamics Asset Management have release a formal response to the accusations made by Laxey Partners at their official website.
I urge all the shareholders of icapital.biz Berhad to read the Capital Dynamics Asset Management’s response and hope this will put an end to all the speculations.
There is one question pop out of my mind when reading what Tan Teng Boo say in a recent interview.
I was at the icapital AGM last year and the Board had clearly say NO the any Dividend payout to the shareholders.
However during the interview that was taking place at the The Edge Malaysia, Tan Teng Boo said “We may consider dividends if shareholders want it.”.
WHY suddenly there is a Big U turn now?
Capital Dynamics Asset Management’s formal response to the accusations made by Laxey Partners
An interview taking place at the The Edge Malaysia
In the 90-minute interview taking place at the The Edge Malaysia, Tan said he is “super angry” that the success of icapital may be undermined by others. Below are excerpts of the interview:
As a seasoned fund manager, did you foresee the hostile entry of foreign hedge funds?
We only knew when they became substantial shareholders, after holding 5% or more. Reports said they started buying two years ago, but they never attended any of our AGMs. In the past, the two funds have worked together, but in other countries.
Will the presence of one, two or three directors affect the direction and operation of the closed-end fund?
Laxey’s Andrew Pagge does not have a good track record in fund management. In fact, he has a track record of causing upsets in companies they invest in. For example in August 2011, Pegge failed to remove four directors of UIS [United International Securities] in Singapore, including Wee Cho Yaw, who is also the chairman of UOB. They may do the same thing here.
Why should you resign if only one or two of the nominees of Laxey is voted in, given that your group will still control the board?
I only said I “seriously consider” resigning or retiring. I did not threaten to resign or give ultimatum. Whether I will quit 100% or not will depend on the outcome of the AGM. What I want is to let the shareholders know in advance the consequences of voting them in.
It’s the share-owners’ call and decision. If the Laxey people come in as ordinary directors, fine. But if they want share buy-back and market-sensitive information, we will not entertain.
As investors, surely shareholders want to see an increase in the price of their shares, since they don’t receive dividends. In what ways can this be done to ensure the share price rise in tandem with NAV?
We have a track record as good as investing in gold. Our compounded asset appreciation is 18% per annum, though this year is a bit weak. We may consider dividends if shareholders want it.
Andrew Pagge has pressed us for share buyback to narrow the discount of the share price to NAV (net asset value). If we do that, what money do we have to invest? As a fund, you will destroy your value if you buy back all your shares. You will have no money to invest. Moreover, how long can you ensure there is no discount?
How many shares do you hold in icapital?
Only one million, less than 1% of the company shares. We cannot buy more shares because for the past 2-3 years, we have been working on a time-sensitive dual-listing project that will benefit shareholders of icapital in some ways. If we buy icapital shares, we may step on securities laws, such as insider trading.
Are there any parties, who are key shareholders, who may help you block the entry of these nominees?
The top 30 shareholders, including the two, hold about 32% of the shares. We have called these shareholders and talked to them. After the news is out, there are other shareholders calling us. They are mainly Malaysian individuals who hold small amount of shares.
But until the AGM, we cannot say for sure whether we have the support. It’s the shareholders’ call on Saturday. Investors will decide whether they want us in, out, or winding up icapital.
icapital has more than 3,000 shareholders. Last year, about 500 turned up at the AGM.
Which are the local institutional funds holding shares in icapital?
No local funds, only individuals. They are very disperse and diverse.
What could happen on Saturday’s AGM and beyond?
As a fund manager, I cannot sit on the board of directors. And I wonder how Andrew Pagge can be voted in as director since he is also a fund manager.
If we (Capital Dynamics) are out, we want to ask for expenses of about RM8 million which we have not claimed for the past seven years since the listing of icapital.
If we had charged icapital for performance fee, we would have bagged another RM20-30 million.
But for us, it’s not just money; it’s the hard work involved.
I am now super angry when people want to do something to destroy a professionally run company.
What are you doing to ensure nobody will undermine icapital?
I have to reach out to shareholders, send letters to owners and the media. I want to tell them the stakes are very high. The AGM is not just about appointing a director, but changing a fund totally.