TIDMMAJE
RNS Number : 9080F
Majedie Investments PLC
10 November 2022
This announcement contains inside information for the purposes
of Article 7 of the UK version of EU Market Abuse Regulation (EU)
No 596/2014 as it forms part of UK domestic law by virtue of the
European Union (Withdrawal) Act 2018 as amended ("UK MAR") and is
being disclosed in accordance with the Company's obligations under
Article 17 of UK MAR. Upon publication of this announcement, this
inside information is now considered to be in the public domain.
This announcement has been authorised for release by the Company's
Board of Directors.
10 November 2022
Majedie Investments PLC (the "Company" or "Majedie")
Change of Investment Management Arrangements
-- Company to appoint Marylebone Partners LLP ("Marylebone Partners") as investment manager.
-- Proposed change to the Company's investment objective and
policy to follow a liquid endowment investment strategy.
-- Board to target an annual dividend, paid quarterly, of
approximately 3 per cent. of Net Asset Value.
-- Company to become a Member of Marylebone Partners, entitling
Majedie to 7.5 per cent. of the residual profits and capital
interest in Marylebone Partners, for no consideration.
-- New demand for the Company's shares identified.
The Board of the Company is pleased to announce that, following
an extensive review of the Company's investment management
arrangements, it has entered into a conditional agreement to
appoint Marylebone Partners as the Company's investment manager and
AIFM.
Founded in 2013, Marylebone Partners is an independent firm,
currently managing approximately US$ 400 million for professional
and institutional clients who include charities, foundations,
family offices, high-net worth individuals, and trusts.
With equities at its heart, Marylebone Partners' long-term,
fundamental approach is aligned with Majedie's ethos. Their
proposition met the Board's criteria for an investment manager who
could deliver strong investment outcomes and bring a new and
relevant proposition to the investment trust sector, whilst
developing the Company's culture and history.
The Board selected Marylebone Partners for its ability to
identify differentiated investment opportunities and reputation for
protecting and growing the wealth of its clients. Marylebone
Partners' investment approach includes three core strategies,
comprising eclectic special investments, allocations to specialist
funds managed by third parties and a focused portfolio of listed
equities. Marylebone Partners sources investments through a global
network, which its principals have built over nearly three decades
at industry leading firms. The Board believes it will be
increasingly important to identify differentiated sources of
performance from the large and growing set of less researched
opportunities that are available within this wider investment
mandate, in addition to the those in the major asset classes.
In conjunction with the appointment of Marylebone Partners, the
Company intends, subject to shareholder approval, to amend its
investment policy to pursue a high-conviction, long-term approach
that is unconstrained by geographic limitations or any formal
benchmark (the "New Investment Policy").
Following adoption of the New Investment Policy, the Company
will target annualised total returns (net of fees and expenses, in
GBP) of at least 4 per cent. above the UK Consumer Price Index,
measured over rolling five-year periods. The target total return
will include an annual dividend, paid quarterly. Each quarterly
dividend payment is initially expected to comprise 0.75 per cent.
of the relevant quarter-end Net Asset Value, leading to an annual
dividend of approximately 3 per cent. of Net Asset Value.
The Company intends to seek shareholder approval of the New
Investment Policy at a general meeting of the Company expected to
be held alongside the Company's Annual General Meeting in January
2023 (the "General Meeting"). Assuming shareholders approve the New
Investment Policy, Marylebone Partners will be appointed as the
Company's investment manager and AIFM immediately following the
General Meeting.
The Board believes the change in investment manager and the
adoption of the New Investment Policy will provide the following
benefits to shareholders:
-- Potential for strong and repeatable investment performance,
enabled by a transition to a liquid endowment model. Over the three
years to 30 September 2022, Marylebone Partners' representative
track record has delivered net annualised performance in GBP of
+8.4 per cent., some 4 per cent. ahead of the U.K. Consumer Price
Index.
-- A differentiated return profile, designed to complement
shareholders' other investments. Given the opportunity across its
three core activities, Marylebone Partners believes it should be
possible to deliver capital appreciation, whilst funding a dividend
out of a combination of underlying income and capital growth.
-- Alignment of interests and participation in the future growth
of Marylebone Partners. The Company will receive, for no
consideration, an interest in Marylebone Partners entitling it to
7.5 per cent. of residual profits and capital.
-- New demand for the Company's shares. The Board is aware of
investors (including parties connected to Marylebone Partners) who
have expressed an interest in becoming shareholders. The Board and
Marylebone Partners believe this may help narrow the discount to
Net Asset Value at which the Company's shares trade currently,
whilst potentially improving liquidity and paving the way for
future growth.
-- Cost mitigation. Marylebone Partners will reduce the
management fee payable by Majedie by 50 per cent. for a period of
twelve months and make a significant ongoing contribution to the
cost of marketing the Company.
Christopher Getley, Chairman, commented:
"Following its review of the Company's investment objective
together with the range of assets to be included within the
Company's portfolio, the Board of Majedie Investments is very
pleased to appoint the team at Marylebone Partners to manage the
Company's assets. Marylebone's appointment will allow all
shareholders to benefit from their successful track record in
investment in a differentiated, but relatively liquid multi-asset
portfolio and also position the Company to grow over time. The
Company's portfolio will bring together Marylebone Partners' best
opportunities in listed equities as well as the large and growing
universe of less researched assets where skilled investors are able
to add more value.
Dan Higgins, Founder of Marylebone Partners, commented:
"We are extremely excited to be appointed as the investment
manager of an investment trust with such a long and distinguished
history. The listed and closed-ended format will enable us to take
advantage of the full range of investments within our scope, giving
a new client base access to these opportunities. After the recent
dislocations caused by economic and geopolitical concerns, we see
greater opportunity than for many years. We look forward to working
with the Board and will work hard to deliver for Majedie's
shareholders."
Further information on Marylebone Partners.
Marylebone Partners LLP
Marylebone Partners is an owner-operated investment manager,
based in London and regulated by the FCA. It was founded in 2013,
with the vision of bringing a distinctive investment approach to
clients seeking a manager to protect and grow their wealth in real
terms. Marylebone Partners' defining characteristic is its ability
to identify and access differentiated fundamental investment
opportunities, sourced through a global ideas network.
Marylebone Partners has built an investment process, risk
systems and reporting infrastructure to institutional standards,
whilst retaining its independence and entrepreneurial spirit.
Team
Marylebone Partners' principals have previously held senior
positions at industry-leading firms and have prior experience of
managing investment trusts. Decisions are made collaboratively, by
a team with varied backgrounds that bring differing perspectives.
The firm's culture encourages continuous improvement and diversity
of thought. Marylebone Partners' Investment Committee comprises its
three senior investment professionals, and three highly respected
non-executive partners:
Dan Higgins: Dan was formerly Chief Investment Officer of
Fauchier Partners LLP, a multi-billion AUM alternatives firm with a
reputation for uncorrelated returns and capital preservation in
difficult markets. At Fauchier Partners, he gained extensive
experience of the closed-ended fund structure through the firm's
flagship listed vehicle, The Absolute Return Trust Limited.
Previously, Dan was a Senior Fund Manager at Mercury Asset
Management plc, where he ran equities portfolios for large
pension-fund clients. He holds a degree in Philosophy, Politics and
Economics from Magdalen College, University of Oxford.
Olivia Macdonald: Olivia joined Marylebone Partners in 2017 from
The Wellcome Trust's investment team, where she focused on private
and public direct investments. Prior to this, she worked for
Goldman Sachs in both sell-side equities research and in their
asset management division. Olivia holds a degree in Philosophy,
Politics and Economics from New College, University of Oxford, and
is a CFA charter holder.
Robert Elliott: Robert joined Marylebone Partners in 2014.
Previously, at THM Partners, he advised companies on operational
and financial restructurings. Prior to this, he was a lawyer
working on corporate finance and M&A transactions for Jones
Day. Robert holds a degree in Law from the University of
Nottingham, a Masters in Finance from the London Business School
and a corporate finance qualification from the Institute of
Chartered Accountants (England & Wales).
Stuart Roden (non-executive): Stuart has chaired Marylebone
Partners' Investment Committee since inception in 2013. Until
January 2019 he was Chairman of Lansdowne Partners, having
previously co-managed the firm's Developed Markets funds. He began
his career at SG Warburg & Co, McKinsey & Company and
Mercury Asset Management plc. He is non-Executive Chairman of Hetz
Ventures and non-Executive Chairman of Tresidor Investment
Management. Stuart received a first-class honours degree in
Economics (BSc) from the London School of Economics.
Marc Jonas (non-executive): Marc is a co-founder of Sun Capital
Partners and has extensive experience as an investor in the
Leisure, Financial Services and Real Estate sectors. He served as
Chairman of Pearl Group's Asset/Liabilities Investment Management
Committee and co-founded Wellington Pub Company in 1997 (where he
was Managing Director) and Punch Group in 1997, serving as a
non-executive director until 2004. Mr. Jonas is a director of
Carnegie Capital Estates and holds several other directorships,
including Apex2100, Clarendon Park Estate and Zeta Shares. He holds
a degree in Philosophy, Politics and Economics from Christ Church,
University of Oxford.
David Haysey (non-executive): David was formerly Head of
Marylebone Partners' public equities investments and has held
senior positions at prior firms including as head of European
equities for SG Warburg plc and Deutsche Bank AG and CIO and co-CEO
of Deutsche Asset Management's European Absolute Return business.
Before joining Marylebone Partners, David worked for RIT Capital
Partners plc, where he was a board member and head of public
equities. He is a non-executive director of Augmentum Fintech plc
and an advisory board member of Cluny Capital Limited. He has a
degree in Philosophy, Politics and Economics from the University of
Oxford.
Proposed investment strategy
Marylebone Partners will build a bespoke portfolio for Majedie,
which will combine the three core strategies that have driven
returns for Marylebone Partners' flagship open-ended strategy since
inception in 2013. They are as follows:
1. Special Investments. Marylebone Partners sources eclectic
opportunities comprising co-investments, special purpose vehicles
and opportunistic / thematic funds. These hard-to-access situations
target potential IRRs of 20 per cent. or better, with monetisation
typically expected within 24-36 months. Importantly, these Special
Investments are independently marked-to-market on a frequent basis
and do not entail the multi-year lockups one would expect of
venture-capital or private-equity situations.
2. External Managers . Drawing upon its extensive network,
Marylebone Partners allocates to a focused selection of funds that
are managed by specialist investors in their respective areas.
These managers pursue fundamental strategies with a defined sector,
geographic or style bias, which Marylebone Partners believes are
structurally inefficient and therefore receptive to skill-based
approaches. Marylebone Partners has a strong preference for backing
talent within independent, owner-operated firms. Through its
long-standing relationships, it can often access funds that are not
widely known and/or may be otherwise closed to new investment.
3. Direct Investments . Marylebone Partners is a long-term
investor in a portfolio of rigorously researched stocks, favouring
high-quality companies that participate in secular tailwinds.
Marylebone Partners invests in liquid securities, primarily listed
in the developed markets, which exhibit attractive growth, business
profitability and strong balance sheets. It seeks situations with
unappreciated earnings potential or strategic value. Valuation
plays an important role in Marylebone Partners'
decision-making.
Reflecting its assessment of the prevailing opportunity set,
Marylebone Partners will allocate proactively between these three
strategies, within identified ranges. Equities will lie at the
heart of Marylebone Partners' new portfolio for Majedie, although
the team is equally comfortable allocating across other asset
classes such as fixed income, real assets, or distressed debt.
Marylebone Partners will seek to add value through security
selection and by biasing the portfolio towards the industries,
regions and style factors they expect to outperform over time. Risk
management and sustainability considerations are embedded within
the investment process.
Investment objective and target return
The Company's investment objective will be to deliver long-term
capital growth whilst preserving shareholders' capital and to pay a
regular dividend.
The performance target will be to achieve net annualised total
returns (in GBP) of at least 4 per cent. above the UK Consumer
Price Index, over rolling five-year periods.(1)
Gearing
The Company has an outstanding debenture issue of GBP20.6m, due
for repayment in 2025. Currently, it is expected that this will
remain in place until maturity. Marylebone Partners and the Board
will maintain an active dialogue to ensure that gearing is being
appropriately and efficiently used.
Dividend policy
Post the appointment of Marylebone Partners, it is proposed that
the Company will pay an annual dividend made up of four quarterly
payments. Each quarterly dividend payment is initially expected to
comprise 0.75 per cent. of the relevant quarter-end Net Asset
Value, leading to an annual dividend of approximately 3 per cent.
of Net Asset Value. The Company has significant revenue reserves
and the ability to pay dividends out of capital. Given the proposed
strategy's focus on capital growth, it is expected that this
ability will be utilised to fund the dividend.
Details on the appointment of Marylebone Partners
Marylebone Partners will receive an annual management fee of
0.90 per cent. of the market capitalisation of the Company up to
GBP150 million; 0.75 per cent. of market capitalisation between
GBP150-GBP250 million; and 0.65 per cent. above GBP250 million. The
market capitalisation for the calculation of this fee shall be
subject to a cap of a 5 per cent. premium to Net Asset Value.
As a contribution to the costs of the change of investment
manager, Marylebone Partners will waive one half of the management
fee payable by Majedie for a period of 12 months from Marylebone
Partners' appointment as investment manager and make a significant
contribution to the cost of marketing the Company.
The Company will become a Member of Marylebone Partners,
entitling it to 7.5 per cent. of residual profits and capital. This
is to be granted to the Company for no consideration.
Following an initial term of two years, the investment
management agreement shall be terminable by either party serving
six months' notice.
Expected timing
A circular regarding the change of management arrangements and
the New Investment Policy, including a notice convening the General
Meeting, will be produced in due course. It is expected that the
General Meeting will be held alongside the Company's Annual General
Meeting in January 2023. Assuming shareholders approve the New
Investment Policy, Marylebone Partners will be appointed as the
Company's investment manager and AIFM immediately following the
General Meeting.
For further information please contact:
Majedie Investments PLC +44 (0)20 7382 8185
William Barlow
J.P. Morgan Cazenove +44 (0)20 7742 4000
William Simmonds
Rupert Budge
LEI: 2138007QEY9DYONC2723
Past performance cannot be relied on as a guide to future
performance.
(1) The target net annualised return is a target only and does
not constitute a profit forecast. There can be no assurance that
the target net annualised return on investments can or will be
achieved and should not be seen as an indication of the Company's
expected or actual results or returns. In particular, the target
net annualised return assumes that the Company will be able to
identify, and deploy capital in, investment opportunities which
fall within the Company's three main investment strategies
described above. Accordingly, investors should not place any
reliance on the target net annualised return in deciding whether to
invest.
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