Coller & SVG: The rebel returns

Coller Capital continued its ongoing feud with the management of SVG Capital – and specifically CEO Lynn Fordham – at the listed group’s recent AGM

Coller Capital continues to be a thorn in the side of SVG Capital and its chief executive Lynn Fordham: at the London-listed group’s annual meeting in March, Coller voted against a number of resolutions relating to Fordham’s re-election and remuneration.

Both Coller and SVG declined to comment. But the secondaries specialist is understood to have governance concerns relating to the structure of SVG Capital, which both owns a fund of funds management business, SVG Advisers, and makes primary investments from its balance sheet, largely (for now) into funds owned by Permira. Fordham has been CEO of both SVG and SVGA since 2008.

Coller is apparently disgruntled about this – particularly in light of the decision last February to sell 50.1 percent of SVGA to Aberdeen Asset Management for £17.5 million (€20.4 million, $27 million). Aberdeen has the option to acquire the remaining 49.9 percent stake after three years.

Coller believes these two leadership functions should be split in the interests of good governance, according to a source familiar with the firm’s thinking. “You shouldn’t have the adviser and the balance sheet [with the] same chief executive; even more so when the adviser is now 50 percent owned by a third party.”

Fordham’s remuneration has been another bone of contention. According to SVG’s 2012 annual report, her annual salary rose 5 percent in April 2012 to £367,500, while she also received a £280,000 cash bonus and a deferred share bonus award of £250,000, bringing the total to £897,500. She’s also eligible for a long term incentive scheme, called the performance share plan (PSP), under which she was awarded 571,402 shares in 2012. These have a face value of £1.6 million; although in the report, remuneration consultant New Bridge Street pegged the expected value at £636,800.

Coller apparently thinks this is “inappropriate”, relative to both her peer group and the company’s recent performance. SVG has “come back because of the market and the rebalancing of the performance of the underlying Permira funds, not because of the actions of the chief executive and the board,” the source suggests.

However, given that the majority of shareholders voted to approve the remuneration report at the AGM, Coller’s concerns about Fordham’s pay are clearly not universal. Afterwards, SVG chairman Andrew Sykes said diplomatically: “The Board recognises that it has a diverse shareholder base with differing views and investments mandates, but we are delighted that a significant majority of our shareholders have voted in favour of all key resolutions.”

And while it’s not easy to make a like-for-like comparison with other listed company CEOs – given the large variable elements – it’s also worth noting that Fordham’s basic salary is less than someone like 3i boss Simon Borrows, whose base was £475,000 in 2012.

On the face of it, Coller’s involvement with SVG – the firm paid £50 million for 50 million shares in SVG in February 2009, as part of a rights issue carried out by SVG to ensure it could meet future fund commitments, and now holds a 20 percent stake – seems to have been a fairly unhappy arrangement. It has clashed with management regularly, including over SVG’s new diversification policy (which enables it to back other managers than Permira).

But it’s worth bearing in mind that Coller bought its stake at 100 pence a share – and they’re now trading at 376 pence. So this should be one cloud with a very silver lining.