Knox D’Arcy, Laxey and QVT have gained control of the board of the Eaglet investment trust.
As reported in Fund Strategy on October 15, the investors, which hold a combined 38.7% of the trust’s share capital, proposed the appointment of three new directors at last week’s annual general meeting.
The appointments of Jonathan Carr, Nicholas Jeffrey and Garth Milne were approved by 55% of votes cast, on a turnout of 62%.
Resolutions to reappoint four directors failed, with a similar proportion of shareholders voting against. Carr has since taken the role of chairman and the new board has announced that it will conduct “a review of the company’s affairs and activities”.
According to Wins Investment Trust Research, any proposals are likely to include a change in the trust’s manager, from Unicorn Asset Management to Knox D’Arcy.
Peter Webb, chief executive officer of Unicorn, has fought to retain control of the trust since the former board members served a one-year notice terminating Unicorn’s management of the fund, last month.
Webb (pictured) proposed a restructuring of the fund and the provision of a cash exit. The board unveiled counter-proposals to liquidate the trust at the start of December. Under the plans, investors would have been able to take a cash exit at net asset value or rollover into the Gartmore Growth Opportunities trust, selected because of its exposure to microcap stocks.
However, it is unlikely that investors will be given the option of switching to the Gartmore fund.
In addition to Knox D’Arcy taking over the management of Eaglet, Wins also expects a reconstruction or tender offer for 50-100% of the share capital and a fund raising of up to £100m.
While trusts investing in alternative asset classes remain popular, equity-based funds are trading on average discounts of over 10%, compared with 6% a year ago.
British smaller company funds have been hit in particular, with discounts close to 20%. Eaglet’s discount, which was 17% last week, has also been affected by the uncertainty surrounding the trust.