SYDNEY, Sept. 2, 2015 /PRNewswire/ -- LIM Advisors is going direct to the unitholders of AMP Capital China Growth Fund ("AGF" or "the Fund") in an attempt to see the persistent discount suffered by unitholders narrowed, after the fund manager, AMP Capital Fund Management Limited ("AMP Capital") has failed to take decisive action.
Funds managed by LIM Advisors are together the largest independent unitholder in the ASX-listed AGF with a current stake of 12.64%. It has owned AGF units since 2010.
Despite the volatile performance of the Chinese stock market over the past few months, AGF units have traded for an extended period at prices which represent a substantial discount to their underlying Net Asset Value. At present that discount is estimated to be 23%.
This discount has seriously reduced the investment returns that the initial unitholders have received and has meant that those buying into the Fund since inception have been unable to realise the full value of the underlying Net Asset Value. Meanwhile, AMP Capital continues to be paid in line with the Net Asset Value, not the heavily discounted unit value that unit holders suffer from.
LIM Advisors has made two formal attempts to encourage AMP Capital to introduce measures to reduce this discount. In August 2011, LIM wrote to the Chairman of the Fund's Responsible Entity, (AMP Capital Funds Management Limited) expressing concerns regarding the underperformance of the Fund's units, as reflected in the persistent discount and the lack of action taken by AMP Capital to address this matter. LIM put forward a number of constructive suggestions to reduce the discount. An insubstantial reply was received six weeks later from the AMP Capital Head of Product which resulted in no substantive action. The discount at that time was 24%.
On 30 June 2015, LIM again formally wrote to the Chairman of the Fund's Responsible Entity, by this time, Mr Stephen Dunne of AMP Capital Funds Management Limited, seeking prompt action to address the discount, which at the time was 25%. LIM again offered constructive suggestions and assistance to identify ways to reduce the discount.
Since the announcement by AMP Capital Funds Management Limited on 13 July 2015 that it was investigating options to reduce the substantial discount at which AGF units trade on the ASX, LIM Advisors has continued to liaise with AMP Capital and its financial adviser.
LIM believes that AMP Capital has failed to respond with any material actions which sufficiently address the issue of the discount. Therefore, LIM has decided to directly engage with all other unitholders by calling an EGM to consider the issue. The Notice of that Meeting will be mailed to all registered shareholders in due course and the meeting will be held in Sydney in October 2015.
LIM intends to propose to unitholders, amongst other things, that the Fund adopt a discount ceiling of 10%. This figure to be calculated on a rolling 90 day basis, with the first test date being 6 months after the date of the EGM. If unitholders approve the required Special Resolution, AMP Capital will be required to take steps to ensure that the discount ceiling is not breached. If it is breached then AMP Capital will be obliged to schedule a continuation vote so that unitholders can decide whether the fund should continue in its present closed end form. LIM's stated intentions are statements of present intention. LIM reserves the right to change its intentions and proposals in its absolute discretion.
Background
LIM Advisors is an Asia-Pacific focused investment manager based in Hong Kong managing approximately US$2 billion, principally for institutional investors located around the world. Funds under LIM's management have owned units in AGF since 2010.
AGF is an A$450 million fund invested in Chinese A shares (Chinese equities listed on domestic Chinese stock exchanges). AGF was launched in 2006 with AMP Capital Investors Limited as its investment manager. AMP Life Limited is the largest unitholder in AGF owning approximately 33%.
LIM is only one of two AGF unitholders (in addition to AMP Life) that owns more than 5% of the outstanding units (the threshold level for being able to call an EGM of unitholders).
About LIM Advisors
LIM Advisors Limited is an Asia-Pacific-focused multi strategy investment group, founded in 1995 by George W. Long, originally under the name Long Investment Management Limited ("LIM"). LIM is based in Hong Kong and has wide regional coverage, with additional research offices in Tokyo, Beijing and London. LIM has extensive investment expertise across the region and has been investing in credit and equities since the firm's inception.
