SYDNEY, July 20, 2015 /PRNewswire/ -- LIM Advisors, the largest independent unitholder in the ASX-listed AMP Capital China Growth Fund ("AGF" or "the Fund") which has owned AGF units since 2010 and with a current stake of 12.36%, acknowledges the announcement by AMP Capital on 13 July 2015 that it is investigating options to reduce the substantial discount at which AGF units trade on the ASX. LIM Advisors first approached AMP to address this issue in 2011.
Despite the 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 26%.
While AMP Capital has recently quoted large return numbers for the Fund, the fact is each unitholder's investment in the Fund has under-performed compared to the Fund's benchmark which is the S&P/CITIC 300 Total Return Index. The Fund's growth in Net Asset Value from launch to June 2015 has been 13.1% per annum (after fees and including distributions), compared to the S&P/CITIC 300 Total Return Index in Australian dollars of 14.0% per annum. The actual return for unitholders is further impacted when the large trading price discount to the Net Asset Value is considered.
This discount has seriously reduced the investment returns that the initial unitholders have received and this has meant that those buying into the Fund since inception have been unable to realise the full value of the underlying Net Asset Value.
LIM Advisors has made two attempts in writing to encourage AMP Capital Funds Management Limited, the Responsible Entity for the Fund (the "RE"), to introduce measures to reduce this discount.
In August 2011, LIM wrote to the Chairman of the Fund's RE expressing concerns regarding the underperformance of the Fund's units, as reflected in the persistent discount and the lack of action taken by the RE 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 Head of Product which resulted in no substantive action. The discount at that time was 24%.
LIM believes that the failure by AMP Capital to address the discount after it has existed for so long is unacceptable. On 30 June 2015, LIM again wrote to the Chairman of the RE 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.
While LIM is pleased that AMP has now announced it is evaluating options to reduce the discount and is hiring an investment bank to assist, the discount continues to be highly detrimental to the interests of all unitholders and must be taken as a priority issue by the RE and addressed immediately.
LIM has advised AMP that unless prompt action is taken by the RE to address the Fund's discount before 31 August 2015, LIM will be minded to take the matter directly to unitholders and call an Extraordinary General Meeting (EGM) for unitholders to consider initiating determined action.
Other AGF unitholders are also clearly concerned about this issue. LIM Advisors has been approached directly by a number of unitholders seeking support to demand that AMP address the discount. As has been noted in media articles, one unitholder, Metage Capital, published an open letter to AMP on 11 May 2015 asking for action on the discount.
Background
LIM Advisors is an Asian-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$500m 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 the only AGF unitholder, besides 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 Asian-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.
