Private equity investment company LMS Capital (LMS:53.5p) has convened an important general meeting on 28 November, so that shareholders can vote on the appointment of its investment manager.
Having considered the proposals from 42 per cent shareholder Robert Rayne who wishes to appoint an internal investment manager, and from top-rated fund manager, Gresham House Asset Management (GHAM), which has the current mandate, the majority of the board concluded that GHAM should continue as the appointed investment manager for the next five years. The recommendation of the directors also factors in a reduction in the annual management fee attributable to the cash balance of the company’s portfolio (see below), and the adoption of a progressive dividend policy, starting in 2020, targeting an initial yield of 4 per cent of net asset value (NAV). All the independent directors voted unanimously in favour of reappointing GHAM.
But Mr Rayne is not keen on this arrangement and has written to LMS’ shareholders outlining his alternative which would see the appointment of an internal investment management group, of which he will be part of. Mr Rayne claims that this would result in a lower cost structure, albeit no specific figures are given in his proposal. He is also proposing the immediate return of £3.5m (4.25p a share) of LMS’ cash pile of £28.5m and a further £4m (4.95p a share) by 30 June 2020, plus the adoption of a targeted dividend yield of 3 per cent of NAV.