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AVI plans to unseat Symphony board

AVI plans to unseat Symphony board – Asset Value Investors is calling on shareholders of Symphony International Holdings to band together to unseat its directors. AVI owns a 15.4% stake in SIHL on behalf of institutional clients including AVI Global Trust. Having first invested in 2012, it has now been concluded that a continued approach of constructive private engagement has no prospects of success.

Tom Treanor of AVI says: “The poor performance of Symphony International Holdings Ltd (SIHL) has gone on long enough. We have two key aims and we need the support of our fellow shareholders to make them a reality.

AVI aims to:

  1. ensure all shareholders are fully informed as to its concerns regarding the stewardship of SIHL and the independence of the board, which in its view is inherently conflicted and whose actions have failed to protect shareholder interests ahead of those of the management team;
  2. gather together sufficient support (30%, including its own 15.4% stake) to requisition an EGM to remove the current directors and replace them with new directors willing and able to properly represent the interests of shareholders. Following their appointment, the new board would be given a mandate to consult widely with shareholders to build a consensus for the optimal path forward to maximise value for the benefit of all shareholders.

About Symphony

SIHL was formed in 2004 with an investment objective of  increasing “Net Asset Value through long-term strategic private equity investments in consumer-related businesses, primarily in the Hospitality, Healthcare and Lifestyle…sectors in the Asia-Pacific region, in particular South-East Asia and India, as well as through investments in special situations and structured transactions”.

As AVI highlights, Symphony’s returns have not been great. AVI says that shareholders invested since the 2007 IPO and who participated in the 2012 rights issue have suffered a -21% negative return. This compares to a +89% return from the MSCI AC Asia index and +141% from the MSCI AC World over the same period.

Furthermore, SIHL today trades at a discount in excess of 50% to estimated NAV. Shareholders who wish to exit their investment in SIHL are forced to accept less than 50c on the dollar to do so. It is AVI’s view that the substantial discount at which SIHL trades represents the market’s view as to the company’s performance track record, investment proposition, its governance, its manager, and its board.

A detailed presentation has been published on AVI’s dedicated website www.savesymphony.com.

Treanor adds: “We, the shareholders, have suffered years of poor performance overseen by the SIHL board. Set against market comparators, the absolute NAV returns have been extremely poor. The impact upon shareholder returns is further exacerbated by the persistently poor share performance and wide discount of share price to NAV (today 50%; averaging c.40%). Whilst shareholders have suffered patiently and without a voice, management has prospered. Eye-watering sums of money have been paid by the Company to the investment manager. In our view, chronic conflicts of interest exist across the Board of Directors and explain why this state of affairs has been allowed to continue for so long.

We are seeking to work with other shareholders whose holdings when combined with our own hit the 30% threshold required to requisition an EGM at which we will seek the removal of the current Board and its replacement with new directors willing and able to properly represent the interests of shareholders.”

[It’s a shame that it has come to this but we have been puzzled for some time as to why Symphony hadn’t tackled its yawning and persistent discount. We recognise though that the company’s hotel and restaurant exposure has been a big drag on returns over the past year for reasons largely beyond its control.]

AGT / SIHL : AVI plans to unseat Symphony board

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