Asset Value Investors (AVI) has reopened hostilities with Symphony International (SIHL), four years after the activist fund manager unsuccessfully sought to remove its board. In a new broadside, AVI accused the Asian private equity fund of pocketing $10m (£7.7m) in annual management fees while doing nothing to help investors stuck with shares languishing 60% below net asset value (NAV).

In an open letter dated 27 October but released by Symphony this afternoon, AVI, the largest independent shareholder with a 16% stake, upbraided the Singapore-based but London-listed company for the lack of progress in its managed wind-down. Launched over two years ago, this has done nothing to shrink the gulf between the share price and the value of its investments in the hospitality, healthcare and lifestyle sectors, exasperating AVI.

Addressing Anil Thadani, a director of Symphony and chair of its investment manager Symphony Asia Holdings, AVI fund manager Tom Treanor said: “Following the airing of our long-held and widely shared concerns regarding, inter alia, poor NAV and share price performance, SIHL’s persistently wide discount to NAV, a highly skewed ratio of manager compensation relative to shareholder returns, and a conflicted board of directors, we were pleased to see the company adopt in September 2023 a strategy of an orderly realisation of its assets.”

Unlike the dozens of other UK-listed investment companies currently winding down in response to stubborn share price discounts, Treanor said Symphony had exhibited a “lack of any meaningful progress in executing on its new strategy, or transparency and commentary on the likely timeframes or outcomes”.

There have been no stock exchange announcements of disposals or sales in the 25 months since Symphony undertook to realise assets and return shareholders their cash.

“Given the deep mistrust of management that exists due to the issues we have covered in our public letters, it is unsurprising that a large swathe of your shareholder register interprets this lack of progress and poor transparency as a sign that management is simply content to continue receiving its ~$10m annuity of annual management fees while disregarding the interests of its long-suffering shareholders,” said Treanor.

Tariffs defence

In response, Symphony rejected Treanor’s claims as “inaccurate and misleading”. It said the chair and staff at fund manager Symphony Asia Holdings held more than twice as many shares as AVI and were fully aligned with shareholders and fully committed to the wind-down of the company and a return of capital.

That’s a defence that AVI has previously rebutted as meaningless arguing much of the managers’ stake was acquired at “zero risk” through compensation schemes.

Symphony insisted the realisation of assets was well under way but had been delayed by the uncertainty over US tariffs this year.

“The company has been and continues to be engaged negotiations with potential buyers in respect of several portfolio holdings, including one significant transaction that was recently delayed as a result of the announcement of tariffs by the United States (for which discussions with the potential buyer remain active).”

Board unchanged

It rejected as “unfounded” Treanor’s description of the Symphony board lacking independence. “The board comprises individuals of high professional standing and integrity and continues to believe strongly in the independence of those stated as such,” it said.

However, the board is virtually unchanged from 2021 when AVI first launched its campaign, for which it still retains a dedicated “Save Symphony” website. Alongside Thadani is Sunil Chadiramani, an executive director and co-manager at Symphony Asia Holdings. Three of the then four non-executive directors also remain in place, including Georges Gagnebin, who has served on the board for 17 years, nearly double the maximum under UK corporate governance rules, and Samer Z Alsaifi, vice-chair and partner of Alcazar Capital in Dubai, which is chaired by Thadani.

Symphony also denied the company was profiteering at shareholders’ expense saying its fees were in line with the market and that in September 2023 the manager had removed the minimum “floor” protecting its revenues.

“The current level of management fees primarily cover operating expenses across the company’s offices in Hong Kong and Singapore, but do not allow for market-level bonuses for professional and other staff,” it said.

Symphony shares gained 2% to 36 cents on news of the latest battle of words between the two sides. This indicates some optimism that a return of capital could be on the cards for Symphony’s long-suffering shareholders.

After today’s rise, the shares are only back to the level they were at in April 2021 when AVI launched its first campaign. That’s a problem for the fund manager given that it has been invested in Symphony since 2012 when the stock traded between 58 and 68 cents.

In March, according to interim results, the company accounted for 2.1% of AVI Global Trust (AGT), AVI’s £1bn flagship, which currently ranks second in the Global investment trust sector with a five-year 88.9% total shareholder return.