An activist investment trust formerly held by Neil Woodford is beginning the process of winding down after shareholders failed to vote with a big enough majority for its continuation.
Crystal Amber expects to have sold its investments in Hurricane Energy, Equals Group, Allied Minds, De La Rue and Sutton Harbour within 24 months. It also expected this was enough time to sell its unquoted holding in Board Intelligence.
The Aim-listed fund was founded in 2008 and takes an activist approach to UK small and mid-cap companies. It had been a holding of Woodford’s funds before his fund house collapsed and at one point also held the Woodford Patient Capital Trust itself with it accounting for 7% of net asset value in late 2018 shortly before it was sold at a £1m profit.
But at the company’s AGM last month, only a slim majority (50.6%) of shareholders voted for the continuation of the £131m investment trust in a resolution that required a 75% majority.
Although the fund will not make any new investments, the investment adviser, Richard Bernstein (pictured), will be able to make “opportunistic” investments in existing holdings, albeit only with prior approval from the board.
Existing holdings will only be added to if the investment is thought to protect the interests of shareholders and/or allow the manager additional influence to maximise value and facilitate and accelerate an exit, the regulatory filing said. Investments that threaten the timescale for realisations would not be allowed.
The board said it would write to shareholders in January to convene an extraordinary general meeting on the plans for the wind down.
Additionally, the board plans to put in place a revised remuneration agreement that incentivises Bernstein to maximise the realisation value of the investment portfolio in a timely manner. Shareholders will also be able to vote on the new agreement.
Woodford first invested in the investment trust in February 2015, stating at the time that it held its management team in very high regard. “This is a company that we have known well for a long time and we are very supportive of its investment approach which aims to deliver long-term value through active engagement with the companies in which it has invested.”
