A new activist investment company is looking to launch with its sights set on “poor performing” alternative investment companies.
A prospectus has been published for Achilles Investment Company, which will start trading on Monday after raising £54m.
It will be managed by Harwood Capital Management and led by its chief executive Chris Mills, with Robert Naylor on the board of directors. The pair worked together to achieve an exit for investors at Hipgnosis Songs Fund and more recently is working with PRS REIT on a strategic review.
Its focus will be on companies in the property, infrastructure, and renewables sector (where it said a £39bn valuation gap has opened up between market caps and asset values in these sectors) and it will look to hold one or two trusts at a time (but up to a maximum of five). It aims to work with boards to realise value for shareholders.
This could be achieved through seizing control of the companies and selling off the portfolio, but in some cases mergers, fee reductions, manager changes, and other less drastic measures may be pursued to encourage a re-rating.
After working with boards and advisers to achieve a result that satisfies investors, it will then use any cash to offer an exit to its investors if they choose.
There is a base management fee of 1% on the lower of market cap or NAV, and a performance fee of 10% if they can deliver a cash exit that is more than 10% above Achilles’s in-price.
The team said that it has unlocked around $950m of shareholder value through activism in the last 18 months – with Round Hill Music sold at a 51% premium to when they were appointed to the board, Hipgnosis Song sold at a 44% premium and PRS REIT currently trading at a 46% premium to when it opened discussions with the board last summer.
The board will be chaired by Charlotte Denton, who currently serves on the board of Starwood European Real Estate Finance and River & Mercantile UK Micro Cap.
It is domiciled in Guernsey and will be listed on the London Stock Exchange’s Specialist Fund Segment.
[QD comment: Wide discounts that have plagued investment companies in the alternative asset classes make just about anybody here a target. Investors are clearly fed up with poor performance and inaction from boards and are now backing Harwood to repeat its successful activist ventures at Hipgnosis, Round Hill, and PRS REIT. The property sector has been the target of heightened M&A activity in recent years and I suspect this is where Achilles will look to strike first. It may be a force for good, and we will see some sleepy boards forced to take action, but there may be some undeserving casualties along the way – especially if wholesale portfolio sales are made at the bottom of the market.]
