Achilles Investment Company (AIC), the £58m investment company activist launched in February, has strayed beyond its closed-end fund remit by taking a stake in private hospital operator Spire Healthcare (SPI).
The Guernsey investment company run by Robert Naylor, former chair of Hipgnosis Songs, is one of four Harwood Capital funds to have recently disclosed a combined 4% stake in Spire.
Last week Sky News reported Harwood Capital was among shareholders which believed Spire was undervalued and should hold talks with potential bidders.
On Friday shares in Spire, which had recently rallied from a four-year low in March, jumped a further 13% after it announced it was in discussions with a number of parties about a sale of the company. They have slipped 1.6% to 243p today.
Shares in the Harwood funds have risen on the news. Achilles is up 0.8% to 110.4p this morning, a gain of over 8% since launch. North Atlantic Smaller Companies (NAS) and Oryx International Growth (OIG), the small-cap trusts run by Harwood founder and boss Chris Mills, are up 1.1% and 0.7% respectively.
Mills is also a co-manager of Achilles, having previously worked with Naylor on the sale of Hipgnosis Songs last year, and, separately, on the strategic review at PRS REIT (PRSR), which last week accepted a £642m cash offer from Waypoint Asset Management.
Spire broadly fits the UK and US equities remits of £492m NAS and £184m OIG, if a little on the large side with a market value of £979m. However, the private healthcare company does not meet the objective of Achilles to target alternative listed funds trading on wide discounts to net asset value, which it did with its campaign at Urban Logistic leading to its sale to LondonMetric Property (LMP) in June.
Our view
James Carthew, head of investment companies research at QuotedData, said: “Achilles has a job to do addressing egregious discounts in alternative asset sectors in the world of investment companies. So going after Spire Health seems odd. The prospectus was pretty clear “The company’s investment strategy is to invest in the shares of closed-ended investment companies, admitted to trading on a market of the London Stock Exchange, with a focus on alternative assets (being assets other than publicly quoted equities) and to seek to maximise value for shareholders through constructive activism.” If, for any reason, this adventure loses Achilles investors money, I think that they would have a valid case for going after the board. If Achilles wants to broaden its remit, it should ask investors first.”
