Activist shareholder joins listed fund board

Swiss listed fund of funds group Private Equity Holding has elected a representative from activist investor Mantra Investissement to its board and vowed to continue its distribution policy.

There's an old saying: keep you friends close, and your enemies closer. Private Equity Holding (PEH), a Zug-based listed fund of funds group managed by Alpha Associates, has seemingly taken that to heart, appointing an associate from an activist investor to its board.

The new board member, Arnaud Studer, was voted in at PEH's annual general meeting on Thursday, according to a statement from the group.
Studer is an associate at Mantra Investissement, an activist investor which last year launched a scathing attack on PEH's management team, and called for all its assets to be realised to generate value for shareholders.

Although the PEH management survived a shareholder vote on its strategy at the time, a significant portion of its shareholder constituency voted against the management team.

Following PEH's annual general meeting earlier this week, chairman Hans Baumgartner, Chris Tanner, Martin Eberhard and Bernhard Schürmann were all re-elected to the group's board, with Studer voted in as an additional member.

In a statement, PEH offered the following explanation for Studer's appointment: “Arnaud Studer has been following Private Equity Holding for several years as representative of Mantra Investissement.”

A spokesman later said the appointment reflected Mantra's enlarged shareholding in the group – it rose from 3 percent to just over 5 percent following last year's AGM – and a desire by PEH to engage with its shareholders in a more meaningful way.

Mantra could not be reached for further comment by press time.

Discussions are now happening about how to address investors’ needs and concerns. Two years ago, boards would probably just have ignored the issue

David Hersh, Mantra Investissement

The presence of someone from an activist shareholder reflects a growing willingness on the part of listed managers to engage with their investors. David Hersh, a partner at Mantra, told Private Equity International earlier this year: “Discussions are now happening about how to address investors’ needs and concerns. Two years ago, boards would probably just have ignored the issue.”

Many shareholder groups, unhappy at wide discounts to net asset value and subdued share prices, have lobbied for listed groups to pursue a realisation strategy. PEH has been pursuing a distribution policy to appease shareholders, a less severe option than a realisation strategy whereby the manager is effectively wound down after disposing of its assets.

PEH shareholders voted at the AGM to continue the firm's distribution policy of the last two years, and the payment of CHF2.00 (€1.67; $2.06) per share out of paid-in capital.

PEH's share price had recovered to CHF43.00 by the close of trading on Thursday, exactly the same share price at this stage last year, and a significant improvement on a low of CHF33.05 reached in August last year.