The Gresham House Strategic (GHS) investment trust is to be wound up after several months of dispute between the board and its recently sacked manager.
It comes after a strategic review of the trust by the board broke down due to the former portfolio manager, Gresham House Asset Management (GHAM), gaining the support of almost half the trust’s shareholders calling for the board to liquidate the portfolio and return their cash.
It is the latest episode in an ongoing battle between the board and GHAM, which is part of Gresham House plc (GHE), that started in May when the board announced a strategic review of the £66m trust which had struggled to attract assets due to its stubborn discount.
The review concluded in early in October at which point the board decided to boot GHAM from its role as portfolio manager and replace it with Harwood Capital, with former GHS lead manager Richard Staveley returning to manage the trust once again.
But last month, GHAM responded to the five-month long strategic review, saying GHS had “failed to deliver an agreed solution for all its shareholders”, a new chair for the board or address governance issues that it had previously raised.
GHAM said the “inadequacy of the consultation” was evidenced by the fact that five out of GHS’ top institutional shareholders, itself included, together representing 43.7% of GHS’ total issued share capital, did not support it.
GHAM subsequently requisitioned an emergency general meeting calling for the liquidation of the trust over a 24-month period and for GHS to immediately return cash on its balance sheet to shareholders.
Strategic review conclusions cannot be implemented
On Friday, the board published a statement, saying it recognised that parties holding 46.8% of the issued share capital of the company backed GHAM’s proposals and therefore, “those resolutions are likely to be approved and the conclusion of the strategic review cannot be fully implemented”.
GHS has agreed to delay the requisitioned meeting until no later than 26 November so that it can include further resolutions relating to a change in investing policy and how to return capital in a way that treats all shareholders equally.
It said Harwood will manage the trust’s wind down over the next two years, provided there is no early termination of its investment management agreement. Harwood has agreed to waive management and performance fees during the run-off process.
Board changes
GHS also announced changes to the board, including the appointment of Simon Pyper as director and the resignation of interim chair Helen Sinclair. Charles Berry has been appointed interim chair but will resign once Pyper joins.
GHS senior independent director Ken Lever said: “The independent directors are disappointed that as a result of the irrevocable undertakings obtained by Gresham House in support of the resolutions to place the company into run-off, shareholders will not have the opportunity of a continuing investment in GHS. However, the board believes that the agreement reached with GHE is in the best interests of shareholders as a whole in these circumstances.”
Gresham House chairman Anthony Townsend said: “With shareholders representing c.47% of the total issued share capital supporting an immediate return of cash and realisation of the company’s portfolio, it is clear that the conclusion of the strategic review was not supported by all shareholders.
“We seek good governance in all our activities, and treating all shareholders equally is part of that. Both GHS and GHE are committed to resolving these issues as soon as possible so a satisfactory outcome can be achieved.”
