The Board of MedicX Fund Limited has agreed to give Octopus Healthcare Adviser an extension to its notice period in exchange for a cut in fees. The announcement says the alteration to the fee structure, which applies to any fees payable on or after 1 October 2015, is designed to enhance shareholder value as the portfolio of the Company grows.
On the first £300m of assets the fee is cut from 0.75% to 0.5%, on the next £200m the fee is cut from 0.65% to 0.5%, between £500 and £750m of assets the fee stays at 0.5%, the fee on the next £250m is also unchanged at 0.4% and then, above £1bn, the fee is cut from 0.33% to 0.3%.
All well and good but, to complicate things further, under the new arrangements, the annual base fee payable to the Investment Adviser will be held at £3.878m (being the current annualised value of the base fee payable to the Investment Adviser) until such time as the value of the Company’s property assets equals or exceeds £782m at the end of a financial quarter (and provided always that if lower, the fee that would have been payable under the old fee structure shall instead be payable); thereafter, the new fee structure as set out above will apply with no minimum floor. This arrangement will enable the Fund to increase its property assets by approximately £217m without any corresponding increase in the investment adviser fee.
The previous contract renewal term was three years, terminable by giving 12 months’ notice prior to the end of the term. As part of the new arrangements, the renewal and notice terms have been changed to provide a rolling contract subject to the Company’s ability to serve two years’ notice at any time.
All other material terms and arrangements within the Investment Advisory Agreement with Octopus Healthcare Adviser Ltd remain unchanged
MXF : Management fee cut for MedicX