I think it is good for minority shareholder because of this new board member issue.
Else Mr. Tan will not create more value for us.
Hedge fund fails to enter icapital board, but happy with AGM
Business & Markets 2012
Written by Chua Kai Shen of theedgemalaysia.com
Sunday, 11 November 2012 22:37
KUALA LUMPUR (Nov 11): European hedge fund Laxey Partners (UK) Ltd failed miserably in its aggressive attempt to grab a seat on the board of directors of ICAPITAL.BIZ BHD [] at last Saturday's annual general meeting (AGM).
But it appeared to be satisfied with the proceedings of the AGM of icapital, as "it got what it wanted".
At the six-hour long AGM, the resolution seeking to appoint Laxey managing director Andrew Pegge was defeated. Another two newcomers said to be associated with him — Lo Kok Kee and Low Nyap Heng — also failed to be voted in.
A total of 86.6% of the shareholders voted against the resolution to appoint Pegge, 87.4% against Lo and 86.8% against Low at the lively gathering that was filled with pro-management and dissenting voices.
Laxey's director present at the AGM, Colin Kingsnorth, said the hedge fund was contented with the outcome of icapital's AGM last Saturday, despite setback at board level.
At a press conference after the polling results were out, Kingsnorth said: "Although Pegg is not elected, he will be contented with the outcome of the AGM".
It's a good thing that Tan Teng Boo is (finally) working on overcoming the discount issue. The discount issue is a very real issue. We're happy that it is being taken aboard by the management now, he added.
Tan leads Capital Dynamics Asset Management Sdn Bhd (CDAM), which is the fund manager of and investor advisor to icapital since its inception.
Kingsnorth said the discount issue is "of paramount importance and the election of the nominees is of secondary importance".
Ahead of the AGM, Laxey's Pegge had demanded Tan to find ways to narrow the market price of icapital to its net asset value (NAV), which was way above the share price then.
Pegge had proposed ways to narrow this discount and one of the ways mentioned was embarking on a share buyback, which Tan had vehemently opposed to.
On Nov 2, Laxey issued a letter to shareholders focussing on its main grouse about the discount issue. In the letter, Laxey also asked for changes to the board.
According to the letter, although icapital reported an NAV gain of 3% compared with the 1% under the FBM KLCI for the financial year ended May 31, 2012, the fund actually underperformed the index.
Also according to Laxey, taking into account the discount to NAV at which the shares traded during the period, the fund had further underperformed the index. While the fund manager received a 13% increase in management fees, the shareholders actually lost 4.5%.
Recently, Laxey has emerged to be icapital's single biggest shareholder holding a 6.9% stake. The second largest is City of London Investment Management Co, with a 6.45% stake.
At the packed AGM on last Saturday, Tan — who prior to this had rejected all the views of Pegge — softened on last Saturday and expressed his commitment to narrow the discount between icapital's share price and NAV.
But before polling was conducted to elect directors, Tan hinted he could quit if the outcome of the election was in favour of Laxey. He said: "This could be my last AGM with icapital."
His veiled threat to resign had worked at the AGM as several shareholders spoke up in support of Capital Dynamics.
At the AGM, Tan also highlighted Capital Dynamic's plan to launch a dual-listed fund, partly to tackle the discount issue of icapital.
Tan said that Capital Dynamics has applied to the Securities Commission to set up the dual-listed fund and it is now waiting for a foreign market's approval for the new fund's listing.
Although Tan did not name the destination of the foreign listing, theedgemalaysia.com learns that it is Hong Kong.
Following the election, the board of icapital now consists of Harun Halim Rasip, David Loo Kean Beng, Datuk Ng Peng Hay, Dato Norraesah Mohamad, Tunku Abdul Aziz Tunku Ibrahim, Tunku Tan Sri Ahmad Tunku Yahaya and Datuk Tan Ang Heng.