Increasing Concentration in Closed-end Property

CEF TIMES June 29-July 5: Two closed-end property funds saw their major shareholders expand their stakes this week

Szymon Idzikowski 6 July, 2011 | 3:47PM
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AFI Development (AFID): Property fund AFI Development’s major shareholder Africa Israel Investments (AFIMF) has purchased an additional 5.14% of the equity and voting rights in the fund, bringing its total stage to around 64%. AFI Development is currently trading at a hefty discount of more than 50%.

Electric & General (ENG): The board of Electric & General has proposed a voluntary winding-up and reconstruction of the company. The resolution will be discussed at a general meeting to be held mid-August. If successful, shareholders and savings scheme participants will be allowed to realise all or part of their investment for cash. Alternatively, they will be given a choice to move their money into a U.K.-authorised open-ended investment company with variable capital. This option will allow them to avoid paying capital gains tax.

Gottex Market Neutral (GMNT): Shareholders of fund of hedge funds Gottex Market Neutral have approved the company liquidation resolution, thus putting the company into voluntary liquidation. After four years of trading the fund was delisted from the LSE on July 1.

Hirco (HRCO): It’s a similar story at property fund Hirco as to that of AFI Development, which trades at an even greater discount of 90% and has just seen two of its current shareholders increasing their stakes in the company. Weiss Asset Management has increased its ownership from 5% to over 18%, while Prana Master Fund has taken its stake from 4.25% to 5.69%.

Majedie Investments (MAJE): Majedie Investments has modified its investment objective and policy. It will now aim to maximise total shareholder returns and increase its dividend above the rate of inflation. The board of directors has also agreed on further capital contributions to the fund.

Premier Energy and Water (PEW): CG Asset Management has increased its stake in the Premier Energy and Water (PEW) fund by another 9%, taking its total holding to almost 15%.

RENN Universal Growth (RUG): Lloyds Banking Group (LLOY) has sold shares in RENN Universal Growth, a North American Smaller Companies fund with a market cap of £38.9 million, reducing its stake by 1.36% to 8.17%. The move does not change Lloyds’ position as third largest shareholder of the fund.

Schroder Income Growth (SCF): Schroder Income Growth has appointed Sue Noffke as permanent fund manager after a stint as ‘caretaker’ while former lead manager Sonja Laud was on maternity leave. Noffke has been with Schroders since the start of her investment career in 1989 and has been a U.K. equity fund manager since 1993. In addition to Schroder Income Growth, she also co-manages two U.K. open-ended funds—Schroder UK Core fund and Schroder Prime UK Equity fund. The latter has achieved trailing returns on a five-year annualised basis of 6.4% since Noffke joined the management team in 2006. Laud will focus on her global portfolios when she returns to Schroders.

SVM UK Active (SVU): Cyrun Finance, which made an offer for the 6% of shares in SVM UK Active that it did not already own back in March, is exercising its right to compulsorily acquire the remaining shares in issue now that the offer has closed. Compulsory acquisition notices have been posted to all remaining SVU shareholders and shares will be transferred to Cyrun on August 11.

Value Catalyst: Trading in Value Catalyst Fund on AIM has been cancelled as of July 1.

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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Szymon Idzikowski

Szymon Idzikowski  is a closed-end fund analyst with Morningstar.