Third Point to sort out its discount – The board of Third Point Offshore Investors says it is committed to maximising shareholder value and protecting the interests of all the company’s stakeholders. The plan includes:
- a move to the Official List
- qualification for the FTSE UK Index Series
- conversion of sterling shares to US dollar shares
- a new sterling quote for the US dollar share line
- buybacks to replace distributions
- more transparency including a new website
The Master Fund that Third Point invests in (managed by Daniel Loeb) returned +18.1% in 2017, net of fees and expenses. The share price returned +26.3% in 2017.
The board has been disappointed by the persistent discount despite the Master Fund’s performance, a frustration shared by many shareholders. The board plans to address this by pursuing amendments to the company’s voting rights structure that are necessary to permit a transfer from the standard listing segment of the Official List to the premium listing segment of the Official List and potential inclusion in the FTSE UK Index Series. At the same time, the company plans to propose the conversion of its outstanding Sterling class of shares into USD shares and the adoption of a Sterling quote alongside the USD quote. The board believes that these steps will improve liquidity for all shareholders, thereby moderating the discount.
The Board has also reviewed the Company’s capital allocation policy and determined that the existing dividend policy is not aligned with the company’s corporate structure or the Investment Manager’s strategy. The Board plans to stop dividend payments and instead give the Investment Manager authority to make opportunistic share purchases on behalf of the Master Fund as an alternative means of future capital return, subject to Board guidance. These purchases should allow the Company to more effectively manage any discount to net asset value. The Master Fund has committed not to exercise any voting rights associated with the purchased shares. Additional information about these policies is available on the website.
Third Point Offshore has developed a new company website designed to make it easier for investors and prospective investors to learn about the Company and the Master Fund (www.thirdpointoffshore.com), reflecting the Investment Manager’s commitment to additional transparency for investors. The Investment Manager has also committed to increasing shareholder engagement and to providing more detailed reporting and disclosure. The Company plans to make further announcements about these proposals shortly.
Marc Antoine Autheman, Chairman of Third Point Offshore Investors Limited, commented: “The Board is fully committed to ensuring that the Company is best-positioned to deliver long-term value for all shareholders. We believe Third Point Offshore Investors’ transfer to a premium listing and the potential for share purchases by the Master Fund, alongside improved investor communication, will help improve the Company’s rating, whilst continuing to showcase the Manager’s successful strategy and portfolio.”
Daniel S. Loeb, the Investment Manager, said “We are committed to aligning our strong risk-adjusted returns with a best-in-class corporate structure for Third Point Offshore Investors’ shareholders. We believe the changes announced today will help to reduce the persistent share discount to NAV.”
[QD comment: It is good news that the board is taking action on the discount. The shift to buybacks instead of distributions bucks the trend somewhat however. We find the commitment to increased transparency most welcome. The shares are up modestly on the news.]
TPOU / TPOG : Third Point to sort out its discount