Achilles (AIC), the investment company activist launched by Robert Naylor and Chris Mills after their salvaging of shareholder returns at Hipgnosis Songs two years ago, is preparing for a second round of campaigns to revive its share price and invest a cash pile that stood at nearly £17m in June.

The company’s maiden annual report since its £54m flotation in February 2025 revealed it had £16.7m in cash at 30 June with a further £15m set to come from the bid for the Toscafund-led bid for Spire Healthcare that was its largest holding at 22% of net assets.

The results showed Achilles had invested 22.4% of net assets in NewRiver REIT (NRR), Picton Property Income (PCTN), Real Estate Investors (REI), Unite Group (UTG) and Sequoia Economic Infrastructure Income (SEQI) at 30 June. 

The previously undisclosed positions came after the company reinvested profits from its first four mostly successful campaigns against Urban Logistics REIT, Empiric Student Property, HICL Infrastructure (HICL) and Life Science REIT. 

With the exception of HICL, Achilles second largest holding at 21% of net asset value (NAV) at 30 June, these investments led to the sales of their targets: Urban to LondonMetric, Empiric to Unite and Life Science to British Land.

Chair Charlotte Denton, a chartered accountant who also sits on the board of Pershing Square Holdings (PSH), said the company saw a “compelling opportunity to deploy capital in listed companies, particularly heavily discounted property, infrastructure and other real-asset-backed shares.”

She added: “A number of companies remain at an impasse, with failed sales, stalled wind-downs and boards resistant to change. The board believes these situations will continue to provide fertile ground for the company’s activist and value-realisation strategy for some time to come.”

Share price is Achilles’ heel

Achilles shares have disappointed, rising only 4.4% to 104.4p since listing, although underlying performance from the portfolio of mostly closed-end funds has been better with a 13.9% total investment return up to 31 August. No dividend was paid to shareholders.

That performance comprised of 10.2% growth in NAV in an extended financial year to 30 June. This was insufficient to generate a 10% performance fee for Mills’ Harwood Capital, which required NAV per share to hit 110p. Instead, the valuation that started at 98.5p after launch costs rose to 108.5p per share. 

However, the firm did earn £743,000 from a base annual management fee set at 1% of the lower of Achilles’ NAV or market capitalisation.

The company made a further 3.4% return in the following two months to leave NAV per share at 112.2p. Since August that has slipped a penny to 111.2p, putting the shares today on a 7% discount.

Importantly, for Achilles’s future, the company had £58.6m of net assets at 30 June, well above the £30m minimum below which it is obliged to hold a continuation vote. 

Successes and misses 

Having been cautious about investing in real asset funds in a falling market after launch, Achilles ended the financial year with £40.9m deployed in companies.

The company scored an early success, bagging a 33% return from pushing Urban Logistics, which it had bought at 117.5p, into an acquisition by LondonMetric at 156.3p.

However, it said Life Sciences’ disappearance into British Land and Spire’s take-private deal generated more modest returns of 14% and 13% respectively. 

Empiric into Unite 

Empiric dashed hopes of a good return after its recommended bid by Unite Group was followed by a damaging trading update last November a month after shareholders approved the deal. The company realised 77.6p per share from a holding bought at 85.4p in April last year, although with dividends included it made an 8.5% total return. 

Having received shares in Unite, Achilles built the UK’s student accommodation provider into its third largest holding as the shares were hit by oversupply in its secondary cities and reduced demand from overseas students. By 30 June, Unite made up 11.3% of assets and since then Achilles has increased the position from 1.3m to 1.5m shares on which it is sitting on an unrealised loss of nearly £900,000 on its £7.6m investment. 

The managers remained positive, saying recent disposals by Unite at a narrow discount supported the valuation case and the shares offered an attractive 8.9% dividend yield.

Aquila and Picton Property 

Aquila European Renewables (AERS), where Naylor is chair, has also been difficult with the activist even threatening fund manager Aquila Capital with legal action after it backed out of a deal to buy half of the portfolio which it is winding down. No return figures were given other than to say the company had received 9.4 euro cents per share in distributions with its valuation more than halving in the first half of this year as the portfolio shrank.

Meanwhile, a merger-arbitrage trade around the all-share offer for Picton from LondonMetric and Schroder Real Estate (SREI) did not pay off with Achilles sitting on an unrealised loss of £416,000 after hiking the position from 1.7m shares (2.1% of NAV at 30 June) to 10m.

Next round 

More investments in undervalued targets are underway with Achilles managers saying: “We are beginning to acquire positions for our next round of activism.”

While Naylor and Mills did not disclose what they were, they indicated that SEQI, where Achilles held a £2.5m stake accounting for 4.2% of assets, could be pressed to launch a formal zero-discount policy. Shares in the £1.2bn debt fund currently stand at 9% below NAV with the board regularly buying back shares. 

The appointment in August of former Investec Wealth CIO Christopher Hills, who has joined as a strategic adviser, could help Achilles with its deal flow. 

There was one board change in June when Philip Cooper, a chartered surveyor who has worked in real estate for over four decades, replaced restructuring expert Brett Miller who left in May.  

Also on the board is Helen Green, another chartered account who serves as a non-executive director at Golden Prospect Precious Metals (GPM).

Our view

Matthew Read, senior analyst at QuotedData, said: “Achilles has made an encouraging start. Four activist campaigns have concluded, three profitably, while the recommended bid for Spire Healthcare should provide another opportunity to realise value. One interesting observation in the manager’s report is that discounts across infrastructure and renewables have narrowed despite rising gilt yields, suggesting that corporate activity and shareholder pressure are beginning to outweigh the influence of interest rates. We have long felt that there is considerable value on offer in the alternative assets space, although unlocking it is likely to become harder as the more straightforward opportunities disappear.

“Achilles’ emphasis on what assets can actually be sold for, rather than simply accepting published NAVs, is important and, while its concentrated approach brings risks, and activism can be time-consuming and expensive, the early results suggest that the strategy is working. The decision to offer shareholders another opportunity to take cash following completion of the Spire bid is welcome, although the fact that nobody took up the previous offer suggests investors see more value in letting the manager continue to exploit the opportunities ahead.”

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