Investment Company has rethink – The board of The Investment Company Plc has published a circular in advance of a meeting at which shareholders will be asked to change the investment objective and investment policy of the company.
The current focus is on income generation. The board says “In recent years this has become increasingly difficult to achieve without detriment to the capital base of the company“. COVID has made the situation worse. The focus will now switch (subject to shareholders’ approval) to “protect the purchasing power of its capital in real terms, and to participate in enduring economic activities which lend themselves to genuine capital accumulation and wealth creation” The dividend will be determined by the future investment portfolio’s flow of income [and we guess will be a lot lower than it is currently]
“The Company will seek to acquire and hold, with no predetermined investment time horizon, a collection of assets which, in the Directors’ judgment, are well-suited to the avoidance of a permanent loss of capital. These assets will be comprised of minority participations in the equity, debt or convertible securities of quoted businesses which the Directors believe are led by responsible and like-minded managers and suitable for the long-term compounding of earnings. In addition, to protect its capital as well as to maintain liquidity for future investments, the Company will keep reserves in (a) liquid debt instruments such as cash in banks or securities issued by governments and/or (b) liquid, non-debt, tangible assets such as gold bullion, whether held indirectly or in physical form.
The Company has no predetermined maximum or minimum levels of exposure to asset classes, currencies or geographies, and has the ability to invest globally. These exposures will be monitored by the Board in order to ensure an adequate spreading of risks. No holding in an individual company or debt instrument will represent more than 15 per cent. by value of the Company’s total assets at the time of acquisition (such restriction does not, however, apply to gold bullion or cash balances). The Company’s holdings of gold bullion may be as high as 35 per cent. of total assets at the time of investment.
Given the Company’s investment objective, asset mix and time horizon, the portfolio will not seek to track any benchmark or index. The Company will not invest more than 10 per cent. of its total assets in other listed closed-ended investment funds. The Company will not use derivative instruments for speculative purposes, nor will it use currency hedges to manage returns in any currency.” [We’d expect it to end up in the flexible investment sector where it will compete with long-established and well-regarded trusts such as Personal Assets and Ruffer.]
The three-strong board, led by Ian Dighé, will grow to five with the appointment of:
- Tom Cleverly who spent the 10 years to 2011 in the audit profession, working for Grant Thornton in the UK and subsequently as a senior audit manager with Mazars in Bermuda. He served on the Board of Edelweiss Holdings plc between November 2011 and September 2015, and has since held directorships in Edelweiss group companies, and currently serves as the company’s treasurer and member of its executive committee. He is a director of Kayson Green Limited, a family controlled distributor of abrasive products, based in the UK. Mr Cleverly holds a degree in accounting and finance from the University of Plymouth and is a Fellow Member of the Institute of Chartered Accountants in England and Wales. He is a British citizen and resident of the UK.
- Michael Weeks who joined the investment team of Edelweiss Holdings plc in 2011, where he has since served as an analyst, head of research, and since 2014 as director in different Edelweiss group companies. He is a CFA charterholder and holds degrees in chemical engineering and philosophy from Rice University. He is a US citizen and resident in Switzerland.
The £15,000 limit on individual director’s pay will be replaced by a £250,000 cap on overall directors’ remuneration.
“Currently, investment advisory services are provided to the Board by Fiske plc. On the basis that Shareholders approve the New Investment Objective and Policy, the advisory agreement with Fiske plc will be terminated in accordance with its terms. Overall responsibility for the investment of the portfolio will remain with the Board, including the Proposed Directors. The Company is and will remain a small registered UK AIFM. The Board will, however, delegate some day-to-day investment decisions to a sub-committee of the Board, for which appropriate terms of reference are in place, and may also delegate responsibility for the execution of specific transactions to a single Director. Any sub-committee of the Board, or any individual Director holding responsibility delegated by the Board, shall report to the Board regularly with regard to any decisions taken. More significant investment decisions will be made by the full Board. The Board believes that, with the addition of the two Proposed Directors, the Board will have the appropriate mix of investment skills and experience, including in portfolio construction and management. The membership of the investment sub-committee will include the Chairman of the Board, Tom Cleverly, and Michael Weeks.”
INV : Investment Company has rethink