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The iCapital.Biz Saga De-Mystified
Malaysia Perspective | 21 November 2012
By:

By Michael Tee

iCapital.Biz (SYM:5108) has been in the spotlight for two reasons lately, one for its fund manager, namely Capital Dynamics Asset Management; receiving approval from the Securities Commission (SC), to apply for a dual-listed global fund. The second and of more interest to investors, is a boardroom tussle involving the founder of the fund, namely Tan Teng Boo; together with Laxey Partners Limited from the U.K. which recently raised its shareholding in the fund to 6.9 percent, making it the single largest shareholder of the fund.

The story began when Andrew Pegge, the co-founder of Laxey Partners was nominated to be a director of the company together with Lo Kok Kee and Low Nyap Heng. The nomination was by Evelyn Ho Lai Ming, a shareholder who holds 50,000 shares in the company. It is understood that Laxey, which has a track record of buying into funds that trade at a discount to their NAV, had earlier sent a letter to shareholders of iCapital.biz urging them to vote against the appointment of the current board and instead vote for Pegge, Lo and Low as it had lost confidence in the ability of the present board to narrow what it argued was a growing discount between its share price and NAV.

The move drew immediate criticism from the founder, Tan Teng Boo; who compared it to a hostile takeover of the company. Prior to the AGM of the company that was held on 10 November 2012, he announced to the media and investors alike that the entry of the Pegge and the others would threaten the continued success of the fund, which he hails as the ideal “close-end” fund that invests on a long-term basis. Earlier, Lo Kok Kee announced to the media that he was not a nominee of Laxey Partners and was just acting as a “minority shareholder rights activist”. He also refuted allegations that he was part of a hostile takeover of iCapital.biz. Based on the iCapital.biz AGM notice, his position is indicated as director and shareholder of OSK & Partners Sdn Bhd, the predecessor of OSK Investment Bank Bhd.

In his defence, Pegge had reportedly said the bid for the Director’s position is an attempt to bring up iCapital.biz’s share price and narrow the gap with its net asset value (NAV), claiming that previous attempts to push the board for action were unsuccessful.

 Pegge had earlier made the news for his repeated attempts to remove Singapore’s billionaire banker, Wee Cho Yam from United International Securities (UIS) Ltd. USI is 50 percent owned by Wee’s UOB Banking Group and 10 percent owned by Laxey. The argument Laxey made was similar to the iCapital.biz case, when it urged UIS to focus efforts on generating returns as well as raising NAV.

Fortunately for Tan Teng Boo at the AGM which took six hours, shareholders overwhelmingly threw their support behind him. Some 87% of shareholders voted against the resolutions seeking board representations for Pegge, Low and Lo. Voting was conducted by poll as Colin Kingsnorth, a co-founder of Laxey Partners, requested for a poll. Shareholders present during the AGM was unanimous in their opinion that iCapital.biz would not succeed without the leadership of Tan Teng Boo, who is often hailed as the “Warren Buffet of Malaysia”, due to his apparent sound investment judgement.
Commenting on the results, Tan said it shows that investors are looking more for long term prospects rather than short term results:

“That is what we’ve been trying to do at iCapital.biz Berhad, to prove that long-term investing in Malaysia can work. It doesn’t have to be just listening to rumours and tips.

“We’ve proven that point, because we got investors and shareholder here who believe in it and are prepared to fight for it,” he told reporters after the AGM.

A World’s First Dual Listed Fund In The Making
Now that the AGM has formally voted in favour of Tan Teng Boo, he can proceed with the dual listed global fund plans for Capital Dynamics Asset Management, the fund manager for iCapital.biz Bhd, which had earlier received approval from the Securities Commission. It is believed to be the world’s first dual listed fund of its kind.

Tan Teng Boo has also insisted that the company’s net asset value had grown by long term value investing which emphasised on performance. He had said the dual-listed fund would help narrow the discount of iCapital.biz’s share price as well as fulfil the promise to shareholders that the fund manager would find a way to allow them to invest globally. Tan told reporters that they are waiting for a foreign market regulator’s approval for an application for the dual-listed fund, but declined to disclose which country was involved. He elaborated that the fund would be exciting for both short-term and long-term investors.

Tan however did not disclose how the new dual-listed fund and iCapital.biz would be linked. He added that despite the ups and downs over the last seven years, the funds’ net asset value have gained a handsome 189 per cent or 17.38 per cent compounded annually. Tan said the fund, had also emphasised on selective investment of value, such as Padini and Petronas Dagangan.
* Information sourced from various news agencies and research houses


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