VPC Specialty Lending shareholders call for change to investment strategy
VPC Specialty Lending Investments is under pressure from shareholders to change its investment policy after trading shares below market value for several years.
The firm published a notice yesterday (7 December) acknowledging that it had received a request from shareholders, dated 6 December 2022, seeking to requisition a general meeting to consider changes to the company’s investment policy and share capital structure.
The requisition was signed by three investors, Global Value Fund, Staude Capital Value Fund and Metage Funds, which hold more than five per cent of the firm’s share capital and as such carry voting rights.
The statement said the board is in the process of reviewing the content and legality of the request with its advisers and a further announcement will be made in due course.
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Speaking to Peer2Peer Finance News today, Tom Sharp from Metage Funds Limited and Miles Staude, representing the two other signatories to the request, said the fund had been trading at a discount to the value of its assets since 2015, and that they had been trying to resolve the issue in negotiation with the board for at least two years.
The investors sent a public letter to shareholders in September calling for a meeting to discuss possible solutions to the ongoing discount between the company’s share price and its net asset value per share.
Having received no meaningful response, they sent a follow up letter on 6 December alongside the requisition request.
It outlined the fact that, in 2020 VPC proposed an exit plan enabling shareholders to realise the value of 25 per cent of their shares that would take effect in 2023, however this was never put to the vote in subsequent meetings. It is also not deemed a sufficient solution by Metage and Staude.
Instead, they are recommending that shareholders back their proposal for the creation of a realisation share class, enabling shareholders to opt into 100 per cent realisation opportunity every three years, starting from next year.
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The investors were advised by law firm Travers Smith, which was cited in the letter as having said the proposals put forward by the investors were not “frivolous, vexatious or ineffective”.
The letter went on to say: “We believe the board has been fundamentally disingenuous both in not identifying this as a critical issue in their discussions and in not making it clear to shareholders that their detailed plans are for the approval, funding and mechanism of the 2023 exit opportunity.”
Sharp said other than confirming that they had received the 6 December requisition notice, VPC had still not directly responded to his or Staude’s correspondence.
“It seems to be that rather than dealing with it in a public way, which is what we think should happen – where they are clear what they want, what their plans are, what they think – that they’re just not publicly engaging at all,” Sharp said. “Which is disappointing.”
A spokesperson for VPC declined to comment further at this stage.
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