Rathbone Investment Management has added its support for the wind-up of poorly performing North American investment trust Gabelli Value Plus (GVP ) as major shareholder Associated Capital Group (ACG) continues to oppose the board’s efforts to implement shareholders’ wishes.
In the latest episode of this unfolding corporate governance row open letter Rathbones stewardship director Matt Crossman last week sent an open letter to GVP’s board saying he was ‘deeply concerned’ by the refusal of ACG, an affiliate of the investment company’s fund manager Gabelli Funds, to ‘countenance a wind-up and their threat of legal action’.
Since shareholders voted in favour of a wind-up of GVP in July, ACG has used its 27% stake to prevent GVP’s board from proceeding with an immediate liquidation and return of capital, a move requiring the support of three quarters of investors.
Instead Bruce Lisman, the non-executive director chairing ACG’s committee set up to deal with the GVP controversy, has called on shareholders to give Gabelli another two years to turn the performance around, only then winding up the fund if it fails.
Crossman, however, said Rathbones, a holder of 5.1% of GVP’s shares, according to Refinitiv data, supported other shareholders such as Metage Capital, CG Asset Management and Investec, which have all stood firm on the decision to discontinue the trust.
‘The resolution to approve the discontinuation of the trust was clearly defeated and yet we find it frustrating that ACG are attempting to trap shareholders against their will,’ he said.
‘We appreciate the difficulty of this situation and the steps being taken by the board to speed up this process,’ wrote Crossman.
‘We remain strong supporters of the actions of the board at this time and make ourselves available for future consultations should the board wish,’ he added.
The £129m listed closed-end fund is the worst performer in the North America investment companies sector over five years with a 26.5% total shareholder return that badly lags the S&P 500’s 112% and the 68.6% gain of the Russell 2000 US smaller companies index.
Numis analyst Priyesh Parmar said the actions of ACG were ‘hard to understand’.
‘Its actions appear to be seeking to protect the income stream for the manager, but this is immaterial in the context of assets under management of c.$29bn at June, and we believe its actions will be having a significant negative impact on the manager’s reputation.’
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