The board of a strategic fund that was due to be wound down has proposed to shareholders that it starts to invest their funds instead.
Rockwood Realisation, formerly Gresham House Strategic, had begun to be wound down after a vote from shareholders last year.
In March, Gresham House sold its 23.7 per cent shareholding in the company, which was bought by a number of institutional investors including Harwood, the company’s investment manager.
Harwood’s total shareholding is now 28.9 per cent (including the 1 per cent held by Richard Staveley, a consultant at Harwood who manages Rockwood Realisation).
In a statement to the stock exchange yesterday (April 7), Rockwood said its board had agreed that the current investment policy does not operate in the best interest of shareholders, and it is proposing to adopt a new strategy of active investment.
So far, as part of the wind-down, £25mn has been returned to shareholders.
Shareholders will vote on the proposals at a general meeting on April 25.
Staveley said the policy to wind-down the portfolio over the period does not recognise the practicalities of doing so, the upside potential and nature of the underlying investments, nor the “huge opportunity” for shareholders to grow net asset value through the re-investment of gains.
“The strategy has significant, illiquid stakes in companies with great prospects for medium to long term shareholder value creation,” he said.
“Forcing a sale in full public view would almost certainly not achieve their market prices and attempting to coordinate strategic outcomes for all companies at the same time, in this short period unlikely to be in the interests of all stakeholders, if indeed possible.”
Staveley said a number of “significant” shareholders have signalled their support for the proposals, and he expects them to pass comfortably.
“We can then crack on again with compounding wealth for all shareholders over the years to come, with a much reduced cost base.”
Rockwood: What happened?
Gresham House Asset Management managed Rockwood Realisation for six years, until a strategic review resulted in its termination and the appointment of Harwood Capital as its new investment manager last year.
Subsequently, shareholders voted for a winding up of the fund and for capital to be returned to investors over the next two years.
This was despite the fund outperforming its benchmark.
Since its inception in 2015, the fund had seen a total shareholder return of 141.5 per cent, outperforming the FTSE All-Share by 12 per cent per annum, and by 70.3 per cent in the past three years.
The fund also saw a return of 24.4 per cent in the six months to September 30.
GHS outperformed both the FTSE All-Share Index and the FTSE Small Cap (ex-ITs) Index which saw total returns of 7.9 per cent and 13.5 per cent respectively in the period.
sally.hickey@ft.com
