LMS Capital reviewing management arrangements – LMS Capital has been reviewing its investment management arrangements since July. The review concluded with a majority of the board deciding that Gresham House Asset Management (“GHAM”) should continue as the appointed investment manager on terms that include both a reduction in the annual management fee (excluding any cash over 5% of NAV from the calculation) and reinstating the Investment Committee with the board having observer status. Changes to the existing performance fee arrangements have also been agreed.
There will also be a 5-yearly continuation vote and a ‘progressive’ dividend policy, starting in 2020 with an initial yield target of 4 per cent. of NAV – which we guess will be funded from capital.
An alternative proposal which would have terminated the existing agreement with GHAM and replaced it with LMS becoming self-managed was submitted by Mr Robert Rayne. As part of the review this proposal has been carefully considered by the independent members of the board (Messrs. Knight, Birkett and Lerner, together the “Independent Directors”). Mr Rayne continues to support a self-managed proposal and says that his view is also supported by a number of shareholders. The board is therefore calling a vote on the matter.
In the event that shareholders do not approve the resolution reappointing GHAM, the Independent Directors have stated that they would intend to resign from the Board with immediate effect. In these circumstances, it is expected that Mr Rayne, together with the replacement directors, would seek to implement the self-managed proposal.
LMS Capital reviewing management arrangements