The value of Majedie Asset Management (MAM) plunged by nearly a fifth in the months before it announced it was being acquired by rival funds house Liontrust.
The valuation hit was revealed in the latest annual results for Majedie Investments, which owns a 14.5% stake in the fund boutique. In the 12 months to 30 September the value of the trust’s holding in MAM sank 19% from £31m to £25.2m, excluding dividends.
The total value of the business is now worth £143.2m, down from £180.7m a year ago.
The performance of Majedie Investments, which is a fettered fund-of-funds vehicle, hinges on the success of MAM. Alongside its stake in the boutique, the remaining 84.9% assets are allocated across four MAM strategies, with James de Uphaugh (pictured) and Chris Field’s UK Equity fund the largest holding at 38.8%.
That has proved challenging in recent years as MAM’s assets and profitability took a hit during the coronavirus pandemic. In the year to 30 September 2020, its pre-tax profits more than halved to £16.3m as AUM tumbled from £10.8bn to £8.1bn.
However, the fund boutique has haemorrhaged a further £2.1bn in the 12 months since, according to Majedie Investments’ results, whittling AUM down to £6bn.
Majedie Investments blamed the stream of outflows on pension fund trustees de-risking their portfolios during the period, as well as the loss of longstanding client St James’s Place, which pulled MAM off several UK equity contracts worth £1.6bn. Though the funds were not redeemed until mid-July, Majedie Investments has reflected the reduced earnings in its valuation of MAM since 31 March 2021.
Chief executive William Barlow said while the trust’s investment in MAM had been “latterly disappointing,” over the long-term he said it had been a “great success” for the trust with an internal rate of return (IRR) above 20% per annum over 19 years.
Last week Liontrust announced it had entered into a conditional agreement to buy MAM in a deal worth up to £120m.
Majedie Investments is expected to be paid £7.7m in dividends on completion of the deal and £14.7m for its stake in the business. That takes the initial consideration to £22.4m, £2.8m below MAM’s year-end valuation of £25.2m.
Barlow added there is a further deferred consideration of cash and shares of up to £5.6m three years after completion depending on future investment performance and growth in AUM.
Despite the hit from MAM, Majedie Investments ended the period with net asset value up 22.5% compared to a 27.9% gain for the FTSE All Share and 22.1% gain for the MSCI All Country. On a share price basis, the trust returned 37.1% to investors, as its discount narrowed from 29% to 20%.
Majedie Investments asset allocation as at 30 September 2021
| Value
£000 |
% of total assets | |
| UK Equity Segregated Portfolio | 67,107 | 38.8 |
| Global Equity Fund | 44,217 | 25.6 |
| International Equity Fund | 13,593 | 7.9 |
| Majedie Tortoise | 21,848 | 12.6 |
| MAM | 25,161 | 14.5 |
| Net cash/realisation fund | 1,025 | 0.6 |
