The board of The Investment Company says that, following a thorough review of available opportunities, the company has entered into discussions to:
- appoint Chelverton Asset Management Limited to act as its investment manager, with a new investment strategy of investing primarily in quoted equities of UK small and mid-cap quoted companies to achieve long-term capital growth;
- provide an opportunity for shareholders to either retain some or all of their shareholding or, alternatively, to realise their investment in cash (at the prevailing net asset value per ordinary share, adjusted for transaction costs); and
- undertake an issuance of ordinary shares to existing and new shareholders.
Founded in 1998, Chelverton is an independent, employee-owned fund management firm with £1.7bn under management across a number of mandates encompassing both open-ended and closed-ended UK and European focused-funds including the MI Chelverton UK Equity Growth Fund, managed by the UK Equity Growth Team. By focussing on long-term investor returns that can be generated by companies with rising cashflows, the team seeks to take advantage of the potential for superior long-term capital performance of certain UK small and mid-cap quoted companies.
Should the proposals become effective, in order to generate long-term capital growth, the company intends to pursue an investment strategy of investing in cash-generative UK small and mid-cap quoted companies that are expected to grow faster than the UK stock market as a whole over the long term and which can finance their own organic growth.
This strategy has been successfully deployed by the MI Chelverton UK Equity Growth Fund, which has returned 222.05% since launch in October 2014 (Source: Morningstar, NAV to NAV, B Shares Acc, Total Return to 28.02.2023).
It is intended that the Chelverton UK Equity Growth Team, comprising of James Baker, Ed Booth and Henry Botting would be responsible for the management of the portfolio.
As part of the proposals, certain employees of Chelverton intend to subscribe for ordinary shares in the company.
It is also intended that David Horner (founder and managing director of Chelverton) will be appointed to the board as a non-executive director. David has indicated to the board that he intends to waive his remuneration entitlement. Michael Weeks intends to step down from the board on completion of the proposals. The other directors of the company are expected to remain as directors.
The proposals need to be approved by shareholders.
[This may not be a bad option for the company, which is one of the oldest investment trusts still in existence. However, as we have said before, it desperately needs to change its name – The Investment Company and the ticker INV make it virtually invisible in any internet search. Also, we don’t really approve of a Chelverton representative going on the board – ideally the board should be entirely independent in our view.]
INV : Chelverton wins battle for The Investment Company