Allco Equity Partners, which is rebranding as Oceania Capital Partners, will temporarily halt investments and plans to return A$60 million ($49 million; €35 million) to its investors following a shareholder vote on 9 July.
The return of share capital stems from a strategic review in April and is meant to address the difference between AEP's net asset value and its share price, a spokesman from the firm said in an interview. At the time, the firm's shares were trading at A$1.95, while AEP’s net assets were valued at A$535.60, representing A$5.83 per share. AEP shares were trading at A$2.70 at press time.
If the the firm's shares continue to trade at a discount to NAV of more than 15 percent after two years, shareholders will decide whether to continue with the business strategy or realise the remaining investments, the firm said. The meeting will be held earlier if the firm's current investments are divested before two years.
At the end of March, AEP had cash reserves of about A$95 million. It will retain approximately A$35 million for working capital and to support existing investments, but will not make any new investments for the time being, the spokesman said.
In November 2008, AEP terminated its management agreement with alternative investment firm Allco Finance Group as the parent went into receivership. The receivers own a 35 percent stake in AEP, earlier held by Allco Finance Group, and disputed the validity of AEP’s spin-out. The New South Wales Supreme Court declared the termination invalid. However, AEP has appealed against the decision and the case is scheduled to be heard on 27 July.
AEP’s investments include a 30.6 percent stake in IT company IBA Health, a 96 percent stake in electronic services company Signature Security Group and a 50 percent stake in receivables management specialist Baycorp.
In 2008, the firm partnered with global bank Macquarie, US buyout major TPG and Canada investment firm Onex, in an A$11.1 billion bid for Australian airline Qantas. The bid failed as it was unable to secure the 50 percent shareholder acceptance.