Welcome!

News Feed Item

QVT Opposes Reappointing Investment Manager

HONG KONG, Dec. 26, 2012 /PRNewswire/ -- QVT Financial LP (together with its funds under management, "QVT") opposes and intends to vote against the reappointment of China Assets Investment Management Limited ("CAIML") as the investment manager of China Assets (Holdings) Limited (the "Company") at the upcoming Extraordinary General Meeting ("EGM") on 28 December 2012.

QVT opposes the resolution to renew the appointment of CAIML due to (1) CAIML's investment record, (2) the absence of any disclosed competitive bidding process with respect to the selection of the investment manager, and (3) the connections between the directors and management of CAIML and the directors and management of the Company.

1. CAIML's Investment Record

In the Company's circular dated 7 December 2012 ("Circular"), the Board of Directors of the Company (the "Board") compared CAIML's investment record to the performance of the Hang Seng Index ("HSI"). QVT believes that CAIML has underperformed the HSI while acting as the Company's investment manager: since the Company's initial public offering ("IPO") on 8 April 1992, the HSI increased by 767% on a total return basis through 30 November 2012, while the Company's Net Asset Value ("NAV") only increased by 87% and the Company's share price fell by approximately 57% during this period. (endnote 1)

Moreover, QVT believes that CAIML has also underperformed the HSI in recent years, and that the comparison of CAIML's investment record to the performance of the HSI by the Board in the Circular was not an appropriate comparison. In the Circular, the Board stated that it is "satisfied with the investment advice given by the Manager for reasons that include: — The Net Asset Value increased... representing an annual compound growth rate of 5.49% for 6 years period, compared with the HSI's annual growth rate of 3.64% over the same period." However, the HSI growth rate as calculated by the Board excludes dividends. Since the Company reinvested its proceeds during the six year period referred to above rather than make distributions to shareholders, QVT believes that the NAV growth rate should be compared to the annual growth rate of the HSI with dividends reinvested, which equals an annual rate of 7.00% during the six year period, exceeding the annual growth in NAV of the Company of 5.49% during this period. QVT calls upon the Board to explain why it chose to compare the NAV growth to that of the HSI excluding dividends instead of the HSI including dividends, and whether it is still satisfied with CAIML's performance when the more appropriate comparison to the HSI including dividends is considered. (endnote 2)

QVT believes that a straightforward approach to compare the Company's investment performance relative to the HSI is to measure the total return in HKD of the share price, NAV, and HSI since the Company's IPO and over the most recent 1-, 3-, and 5- year periods to 30 November 2012:


Company

Company

Hang Seng

Period                

Share Price

Net Asset Value

Index

Since IPO          

-57%

+87%

+767%

Since 30 November 2007    

-58%

-24%

-9%

Since 30 November 2009    

-35%

-16%

+11%

Since 30 November 2011    

-18%

-15%

+27%

(endnote 1)

In each of these periods, both the Company share price and NAV have substantially underperformed the HSI.

QVT notes, however, that since the Company's IPO, CAIML has been paid more than HKD 194 MM in management fees, which represents approximately 70% of the Company's market capitalization on 30 November 2012. On the other hand, the market capitalization of the Company has decreased by approximately HKD 356 MM over this time period. (endnote 3)

2. Lack of Disclosed Competitive Bidding Process

Surprisingly, despite the performance noted above and the fees paid to CAIML, QVT is not aware that the Board has tendered the management contract to a competitive bidding process over the twenty years since the Company's IPO. QVT is also surprised that the fee terms do not appear to have been renegotiated over these twenty years (prior to the recent introduction of a fee cap and high water mark), particularly in light of the Company's underperformance relative to the HSI, or over the past six years, as the global financial crisis led to increased pressure on investment management fee terms in general.

QVT believes that the Board should tender the management contract to a competitive bidding process, and hereby requests that the Board disclose when, if ever, it has done so in the past and if it has done so in relation to the current proposed renewal.

3. Connections Between CAIML and the Company

QVT believes that, consistent with good industry practice, the relationship between the Company and its investment manager should be entirely at arm's length. However, QVT finds that there are multiple points of connection between the directors and management of the Company and the directors and management of CAIML, including:

  • Mr. Lo Yuen Yat is a director of both the Company and CAIML;
  • Mr. Lin Jun How, the Vice President of CAIML, is the son-in-law of Mr. Lo;
  • Ms. Lao Yuan Yuan is the daughter of Mr. Lo, the spouse of Mr. Lin, a director of the Company, and a former director of CAIML;
  • Mr. Yeung Wai Kin owns 3% of CAIML and was a director of CAIML until 2011, has been a director of the Company since 1997, and is a director and Chief Financial Officer of First Shanghai Investment Ltd. ("FSIL"), where Mr. Lo is the Chairman and a c. 12% shareholder;
  • Mr. Chan Suit Khown, the Chief Investment Officer of CAIML, was a director of the Company until 2012, and is currently a director of a subsidiary of FSIL;
  • Mr. Zhao Yu Qiao has been a director of the Company since 2000, and in 2011 acquired a 28% shareholding of CAIML from FSIL; and
  • Mr. Wang Jun Yan owns 3% of CAIML and is also a director and shareholder of the fund manager of a fund in which the Company and FSIL are investors.

(endnote 4)

QVT is concerned that the multiple connections between the Company and CAIML may create the potential for conflicts of interests. QVT thus has a strong preference for an entirely independent investment manager.

For the reasons set forth above, QVT opposes and intends to vote against the reappointment of CAIML as investment manager of the Company at the upcoming EGM.

For media inquiries, please contact:
Shawn Pattison or Patrick Clifford
The Abernathy MacGregor Group 
+1 212 371 5999

Notes:

This Announcement is being issued for the purpose of expressing QVT's opposition, as a shareholder of the Company, to the reappointment of CAIML as investment manager of the Company. This Announcement does not constitute legal, investment or tax advice, and no offer, invitation or inducement to acquire or dispose of any shares or other securities in the Company is being made by or in connection with this Announcement.

If shareholders or potential investors are in any doubt as to any aspect of the Announcement or as to the manner in which they should vote at the EGM or other action that they should take, they should consult their own stockbroker, bank manager, accountant or other independent professional advisor and should rely solely on their own judgment, review and analysis.

QVT may, at its sole discretion, at any time in the future (in open market or privately negotiated transactions) buy or sell shares or trade in options, puts, calls or other securities relating to such shares. QVT reserves the right to take any actions with respect to its investments in the Company as it deems appropriate, including but not limited to, communicating with the management of the Company, the Board of the Company and other investors and third parties.

The information and opinions contained in this Announcement reflect QVT's internal analysis and opinions (and no one else's) of publicly available information. QVT makes no representation, warranty or undertaking, expressly or impliedly, as to the accuracy or completeness of the information contained herein. The information contained in this Announcement, including data that is attributed to specific sources, has not been verified by QVT or any other person. No representation, warranty or undertaking, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information, the calculations, the opinions, or the estimates contained in this Announcement or on the assumptions on which they are based.

The information, calculations and opinions contained in this Announcement should be read as at the date of this Announcement and are subject to change without notice. QVT does not undertake to accept any obligation to provide access to any information, to update this Announcement or to correct any inaccuracies in it.

Endnotes:
(1) Sources for preceding paragraph/table: Bloomberg, Company releases. Key assumptions: the NAV of the Company at IPO equaled the "adjusted net asset value per share" and the share price of the Company at IPO equaled the share subscription price, both as disclosed in the Company's placing memorandum dated 8 April 1992; dividends for the HSI are reinvested at their respective ex-dividend dates; the dividend for the Company is reinvested at the closing price on the ex-dividend date when calculating the share price total return, and at the stated NAV on 31 December 1997 when calculating the NAV total return.
(2) Sources for preceding paragraph: Bloomberg, Company circular dated 7 December 2012.
(3) Sources for preceding paragraph: Bloomberg, Company releases.
(4) Sources for preceding paragraph: Company releases.

SOURCE QVT Financial LP

More Stories By PR Newswire

Copyright © 2007 PR Newswire. All rights reserved. Republication or redistribution of PRNewswire content is expressly prohibited without the prior written consent of PRNewswire. PRNewswire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

Latest Stories
Using new techniques of information modeling, indexing, and processing, new cloud-based systems can support cloud-based workloads previously not possible for high-throughput insurance, banking, and case-based applications. In his session at 18th Cloud Expo, John Newton, CTO, Founder and Chairman of Alfresco, described how to scale cloud-based content management repositories to store, manage, and retrieve billions of documents and related information with fast and linear scalability. He addres...
SYS-CON Events announced today the Kubernetes and Google Container Engine Workshop, being held November 3, 2016, in conjunction with @DevOpsSummit at 19th Cloud Expo at the Santa Clara Convention Center in Santa Clara, CA. This workshop led by Sebastian Scheele introduces participants to Kubernetes and Google Container Engine (GKE). Through a combination of instructor-led presentations, demonstrations, and hands-on labs, students learn the key concepts and practices for deploying and maintainin...
The competitive landscape of the global cloud computing market in the healthcare industry is crowded due to the presence of a large number of players. The large number of participants has led to the fragmented nature of the market. Some of the major players operating in the global cloud computing market in the healthcare industry are Cisco Systems Inc., Carestream Health Inc., Carecloud Corp., AGFA Healthcare, IBM Corp., Cleardata Networks, Merge Healthcare Inc., Microsoft Corp., Intel Corp., an...
Cloud analytics is dramatically altering business intelligence. Some businesses will capitalize on these promising new technologies and gain key insights that’ll help them gain competitive advantage. And others won’t. Whether you’re a business leader, an IT manager, or an analyst, we want to help you and the people you need to influence with a free copy of “Cloud Analytics for Dummies,” the essential guide to this explosive new space for business intelligence.
"We're bringing out a new application monitoring system to the DevOps space. It manages large enterprise applications that are distributed throughout a node in many enterprises and we manage them as one collective," explained Kevin Barnes, President of eCube Systems, in this SYS-CON.tv interview at DevOps at 18th Cloud Expo, held June 7-9, 2016, at the Javits Center in New York City, NY.
Big Data, cloud, analytics, contextual information, wearable tech, sensors, mobility, and WebRTC: together, these advances have created a perfect storm of technologies that are disrupting and transforming classic communications models and ecosystems. In his session at @ThingsExpo, Erik Perotti, Senior Manager of New Ventures on Plantronics’ Innovation team, provided an overview of this technological shift, including associated business and consumer communications impacts, and opportunities it ...
Aspose.Total for .NET is the most complete package of all file format APIs for .NET as offered by Aspose. It empowers developers to create, edit, render, print and convert between a wide range of popular document formats within any .NET, C#, ASP.NET and VB.NET applications. Aspose compiles all .NET APIs on a daily basis to ensure that it contains the most up to date versions of each of Aspose .NET APIs. If a new .NET API or a new version of existing APIs is released during the subscription peri...
Enterprise networks are complex. Moreover, they were designed and deployed to meet a specific set of business requirements at a specific point in time. But, the adoption of cloud services, new business applications and intensifying security policies, among other factors, require IT organizations to continuously deploy configuration changes. Therefore, enterprises are looking for better ways to automate the management of their networks while still leveraging existing capabilities, optimizing perf...
SYS-CON Events announced today that 910Telecom will exhibit at the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. Housed in the classic Denver Gas & Electric Building, 910 15th St., 910Telecom is a carrier-neutral telecom hotel located in the heart of Denver. Adjacent to CenturyLink, AT&T, and Denver Main, 910Telecom offers connectivity to all major carriers, Internet service providers, Internet backbones and ...
Ixia (Nasdaq: XXIA) has announced that NoviFlow Inc.has deployed IxNetwork® to validate the company’s designs and accelerate the delivery of its proven, reliable products. Based in Montréal, NoviFlow Inc. supports network carriers, hyperscale data center operators, and enterprises seeking greater network control and flexibility, network scalability, and the capacity to handle extremely large numbers of flows, while maintaining maximum network performance. To meet these requirements, NoviFlow in...
Adding public cloud resources to an existing application can be a daunting process. The tools that you currently use to manage the software and hardware outside the cloud aren’t always the best tools to efficiently grow into the cloud. All of the major configuration management tools have cloud orchestration plugins that can be leveraged, but there are also cloud-native tools that can dramatically improve the efficiency of managing your application lifecycle. In his session at 18th Cloud Expo, ...
SYS-CON Events announced today that LeaseWeb USA, a cloud Infrastructure-as-a-Service (IaaS) provider, will exhibit at the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. LeaseWeb is one of the world's largest hosting brands. The company helps customers define, develop and deploy IT infrastructure tailored to their exact business needs, by combining various kinds cloud solutions.
Hostway Services, Inc. and WSM International have partnered to deliver trouble free migration services for any organization that wishes to bring their IT infrastructure to Hostway's Azure managed cloud services. WSM is the leader in providing turn-key IT migration services since 2003 and is now the preferred provider to any Hostway customer that is seeking to move its computer infrastructure to the Hostway Azure-based cloud.
Ovum, a leading technology analyst firm, has published an in-depth report, Ovum Decision Matrix: Selecting a DevOps Release Management Solution, 2016–17. The report focuses on the automation aspects of DevOps, Release Management and compares solutions from the leading vendors.
Continuous testing helps bridge the gap between developing quickly and maintaining high quality products. But to implement continuous testing, CTOs must take a strategic approach to building a testing infrastructure and toolset that empowers their team to move fast. Download our guide to laying the groundwork for a scalable continuous testing strategy.