The shareholders, who are led by Bermuda-based hedge fund manager Equilibria Capital Management, want RHJ, which has a market capitalisation of €343m – including €266m in cash on its balance sheet – to break up the business, as they believe there is more value in the assets than the entity as a whole.
Shareholders representing 3.4% of the company have also written to RHJ to demand that a request for the payment of an “extraordinary one-time dividend” of €2.4 be added to the agenda of the company’s annual general meeting on 19 June. Payment of this would have seen around €200m taken off the company’s books, however RHJ said in a stock market note that due to “the lack of distributable monies under Belgian company law” it is unable to fulfil the shareholder’s request to add the item to the agenda.
Daniel Tafur, chief investment officer at Equilibria, which controls 1.5% of the shares said he was disappointed RHJ had decided not to at least table the idea of an extraordinary dividend at its AGM and that Equilibria would be “taking legal advice” about it.
Explaining why Equilibria had decided to take this action Tafur said: “The matter is quite straightforward from our point of view and it is a view shared by many investors.
“The company is being run in a very inefficient and costly manner. Since the company had its IPO in 2005, the stock has fallen some 80% – it has changed strategy a number of times – first trying to buy Japanese companies, then automobile companies, now it seems to want to turn into a financial conglomerate. In doing this, it is haemorrhaging a considerable amount of money – around €30m to €40m, a year in corporate overheads and due diligence which is highly destructive to the shareholder value.
“For the first time the company has quite a lot of cash on its balance sheet and we believe paying a dividend to shareholders would be one way of unlocking value immediately.”
Tafur added that in the long run however, “spinning off” Kleinwort Benson as a separate entity and then winding up the other assets would be the best strategy for the company and for shareholders.
A spokesperson for RHJ told International Adviser that the company is happy with the progress of its strategy to “transform the company from an industrial conglomerate to a financial services company” which, he added, is “nearly complete”.
As well as Kleinwort Benson, RHJ also owns Zurich-based asset managers Arecon AG and German private bank Quirin Bank AG. Its legacy industrial holdings include Shaklee Global Group and Sigmaxyz.
RHJ has been in discussions with Deutsche Bank since July last year over a possible purchase of the bank’s private banking arm, BHF – a unit which would complement Kleinwort Benson. The request for the extraordinary dividend would have effectively made this purchase unfeasible.
The RHJ spokesperson added that it is continuing to pursue the possible of acquisition of BHF and that the company believes its current strategy is “value enhancing and it will therefore continue to pursue this”.