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- India Capital Growth continuation vote – urgent video from the board to its shareholders
A message from the Chairman from India Capital on Vimeo.
India Capital Growth will hold an extraordinary general meeting on 12 June 2020, in Guernsey, where shareholders will be asked whether they want the fund to continue.
The board undertakes a performance assessment every three years and a vote on the trust’s continued existence is put to shareholders only in the event that either of the following criteria are met:
While the first of these criteria has been satisfied, IGC’s performance is very unlikely to improve sufficiently to meet the second threshold by 6 August 2020 (the date for the next three yearly assessment). Diluted NAV per share fell 45.8% from 7 August 2017 to 15 May 2020, representing a cumulative underperformance against the benchmark (BSE Mid Cap Total Return Index) of 14.1%.
The board has therefore decided to bring forward the date for proposing the continuation resolution and its proposals.
In order for IGC to have a future, the board recognises that the following parameters must be satisfied:
The board believes there is potential for IGC’s performance to improve significantly and is proposing the company continues. To this end, the board has put forward the following, to redress the underperformance, subject to the passing of continuation resolution:
If the resolution is not passed, proposals to wind-up, reorganise or reconstruct the company, will be put to shareholders. Given the extremely volatile market environment and the as yet unknown impact of COVID-19 on India, the board considers that the realisation of the company’s portfolio of investments at the present time is likely to result in sub-optimal returns for shareholders.
“The company has significantly underperformed its benchmark, India’s BSE Mid Cap Total Return Index, in the recent past. This is disappointing and means the company is likely to fail the second part of its three-yearly assessment in August, triggering a continuation vote, details of which are set out below. As a result, the board has been carefully assessing, in the interest of shareholders, the best options for the future of the company.”
“The choice is between winding up the company at a time when Indian mid-cap and small-cap equities are trading at close to their 15-year lows; or taking strong measures to improve performance and provide shareholders with a way to redeem the bulk of their holdings, if they wish, at a set date in the future.”
“The board has weighed both options and is now putting before shareholders its proposed way forward. These include extensive measures to improve performance, a redemption offer at the end of 2021 and a cut in the fee the company pays to the investment manager, Ocean Dial. Below, and in more detail in the circular being dispatched today, is information on the proposals.”
“The directors consider this way forward is in the best interests of the company and shareholders. If you wish India Capital Growth Fund to continue you should vote in favour of these proposals at the EGM on 12 June, with proxy votes needing to be lodged by 10 June. The directors unanimously recommend you do this.”
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