The terse battle between Gresham House Asset Management and Harwood Capital over Gresham House Strategic appears to have spilled over into a new investment trust with shareholders in Strategic Equity Capital approaching the board of the Odyssean Investment Trust seeking a £371m merger.
The move would see lead manager Ken Wotton (pictured), from GHAM, dropped as investment manager to be replaced by Odyssean fund managers Stuart Widdowson and Ed Wielechowski.
The £221m Odyssean investment trust, which has links to Harwood Capital, has received letters supporting the transaction from shareholders representing 32.9% of Strategic Equity Capital.
The proposals look set to put GHAM and Harwood Capital head-to-head again, less than a fortnight after shareholders voted to seal the fate of the Gresham House Strategic trust and begin its wind down ending a contentious dispute between the board, who wanted Harwood to run the portfolio, and GHAM, which had a significant shareholding in the trust.
GHAM got its way in that boardroom battle but it now looks like it could lose Strategic Equity Capital thanks to a group of dissatisfied shareholders.
GHAM only took over as investment manager of the investment trust in May 2020 in place of GVQ IM, which the board dropped due to concerns about the boutique firm’s resourcing, both in the investment team and the sales and marketing department. It had been trading at a persistent double-digit discount in the lead up to GHAM being appointed.
Incumbent managers Jeff Harris and Khanbhai joined GHAM as part of the changeover but Wotton (pictured) took over in October that year after Harris departed the business.
But just over a year later shareholders representing a third of votes are seeking Odyssean to takeover the mandate, despite performance keeping pace with the sector over the last year. Odyssean Capital, which runs the trust, is a joint venture between Harwood Capital and Widdowson.
QuotedData head of investment companies James Carthew points out Widdowson was once a manager of Strategic Equity Capital, while he was employed at GVQ IM. “Strategic Equity Capital has outperformed Odyssean over the last 12 months in both NAV and share price terms, but Odyssean trades at a premium, whereas Strategic Equity Capital trades at an undeserved discount,” Carthew said.
In today’s regulatory filing, chairwoman Jane Tufnell said discussions were at an early stage but that the merger would present ” a unique opportunity to create a leading investment trust differentiated from the wider UK small cap sector”.
“The combined entity would have a long-term supportive shareholder base, strong shareholder liquidity and discount control mechanisms, a premium rating and greater scale, and this would be of long-term benefit for both sets of shareholders,” Tufnell said.