Fund management group M&G, a 3.4% shareholder in HICL Infrastructure (HICL), has joined rebel investors in calling for it to abandon a planned £5.3bn merger with The Renewables Infrastructure Group (TRIG).
According to The Times, M&G managers have written to the HICL board saying they can see “no strategic nor financial rationale for the combination” and criticising it as “a transfer of value from HICL to TRIG shareholders”.
An M&G spokeswoman told the paper: “They have therefore stated that if the management doesn’t abandon the plan then they will vote against it.”
M&G’s objections are the same as CG Asset Management, the Capital Gearing Trust (CGT) manager that is leading the charge against the merger, and 11 other institutional investors backing its campaign, as well as the Border to Coast local authority pension scheme.
HICL says it has received “positive soundings” from its biggest shareholders, thought to include wealth managers Brewin Dolphin and Rathbones, and that the merger will put the enlarged company in the FTSE 100 where it will benefit from greater scale, liquidity and visibility.
Critics say the deal is motivated by the desire of InfraRed Capital Partners, manager of both investment companies, to retain TRIG’s assets and avoid the fund having to hold a continuation vote next year that it might lose. They have been bolstered by strong half-year results from HICL last week indicating it does not need to do the deal.
Individual fund managers at M&G make their own voting decisions on corporate events, said The Times. Of 76.5m HICL shares held by M&G, 65.4m would be voted against, it said. M&G has £365bn under management, making it one of the UK’s biggest asset managers.
