Welcome!

Microsoft Cloud Authors: Elizabeth White, Liz McMillan, Mihai Corbuleac, Pat Romanski, David Bermingham

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.

@ThingsExpo Stories
SYS-CON Events announced today that ContentMX, the marketing technology and services company with a singular mission to increase engagement and drive more conversations for enterprise, channel and SMB technology marketers, has been named “Sponsor & Exhibitor Lounge Sponsor” of SYS-CON's 18th Cloud Expo, which will take place on June 7-9, 2016, at the Javits Center in New York City, New York. “CloudExpo is a great opportunity to start a conversation with new prospects, but what happens after the...
The IoTs will challenge the status quo of how IT and development organizations operate. Or will it? Certainly the fog layer of IoT requires special insights about data ontology, security and transactional integrity. But the developmental challenges are the same: People, Process and Platform. In his session at @ThingsExpo, Craig Sproule, CEO of Metavine, will demonstrate how to move beyond today's coding paradigm and share the must-have mindsets for removing complexity from the development proc...
SYS-CON Events announced today that EastBanc Technologies will exhibit at SYS-CON's 18th International Cloud Expo®, which will take place on June 7-9, 2016, at the Javits Center in New York City, NY. EastBanc Technologies has been working at the frontier of technology since 1999. Today, the firm provides full-lifecycle software development delivering flexible technology solutions that seamlessly integrate with existing systems – whether on premise or cloud. EastBanc Technologies partners with p...
WebRTC is bringing significant change to the communications landscape that will bridge the worlds of web and telephony, making the Internet the new standard for communications. Cloud9 took the road less traveled and used WebRTC to create a downloadable enterprise-grade communications platform that is changing the communication dynamic in the financial sector. In his session at @ThingsExpo, Leo Papadopoulos, CTO of Cloud9, will discuss the importance of WebRTC and how it enables companies to fo...
The IoT is changing the way enterprises conduct business. In his session at @ThingsExpo, Eric Hoffman, Vice President at EastBanc Technologies, discuss how businesses can gain an edge over competitors by empowering consumers to take control through IoT. We'll cite examples such as a Washington, D.C.-based sports club that leveraged IoT and the cloud to develop a comprehensive booking system. He'll also highlight how IoT can revitalize and restore outdated business models, making them profitable...
SYS-CON Events announced today that MangoApps will exhibit at SYS-CON's 18th International Cloud Expo®, which will take place on June 7-9, 2016, at the Javits Center in New York City, NY. MangoApps provides modern company intranets and team collaboration software, allowing workers to stay connected and productive from anywhere in the world and from any device. For more information, please visit https://www.mangoapps.com/.
SYS-CON Events announced today the How to Create Angular 2 Clients for the Cloud Workshop, being held June 7, 2016, in conjunction with 18th Cloud Expo | @ThingsExpo, at the Javits Center in New York, NY. Angular 2 is a complete re-write of the popular framework AngularJS. Programming in Angular 2 is greatly simplified. Now it’s a component-based well-performing framework. The immersive one-day workshop led by Yakov Fain, a Java Champion and a co-founder of the IT consultancy Farata Systems and...
What a difference a year makes. Organizations aren’t just talking about IoT possibilities, it is now baked into their core business strategy. With IoT, billions of devices generating data from different companies on different networks around the globe need to interact. From efficiency to better customer insights to completely new business models, IoT will turn traditional business models upside down. In the new customer-centric age, the key to success is delivering critical services and apps wit...
Join us at Cloud Expo | @ThingsExpo 2016 – June 7-9 at the Javits Center in New York City and November 1-3 at the Santa Clara Convention Center in Santa Clara, CA – and deliver your unique message in a way that is striking and unforgettable by taking advantage of SYS-CON's unmatched high-impact, result-driven event / media packages.
In his keynote at 18th Cloud Expo, Andrew Keys, Co-Founder of ConsenSys Enterprise, will provide an overview of the evolution of the Internet and the Database and the future of their combination – the Blockchain. Andrew Keys is Co-Founder of ConsenSys Enterprise. He comes to ConsenSys Enterprise with capital markets, technology and entrepreneurial experience. Previously, he worked for UBS investment bank in equities analysis. Later, he was responsible for the creation and distribution of life ...
SYS-CON Events announced today that BMC Software has been named "Siver Sponsor" of SYS-CON's 18th Cloud Expo, which will take place on June 7-9, 2015 at the Javits Center in New York, New York. BMC is a global leader in innovative software solutions that help businesses transform into digital enterprises for the ultimate competitive advantage. BMC Digital Enterprise Management is a set of innovative IT solutions designed to make digital business fast, seamless, and optimized from mainframe to mo...
SYS-CON Events announced today that MobiDev will exhibit at SYS-CON's 18th International Cloud Expo®, which will take place on June 7-9, 2016, at the Javits Center in New York City, NY. MobiDev is a software company that develops and delivers turn-key mobile apps, websites, web services, and complex software systems for startups and enterprises. Since 2009 it has grown from a small group of passionate engineers and business managers to a full-scale mobile software company with over 200 develope...
As cloud and storage projections continue to rise, the number of organizations moving to the cloud is escalating and it is clear cloud storage is here to stay. However, is it secure? Data is the lifeblood for government entities, countries, cloud service providers and enterprises alike and losing or exposing that data can have disastrous results. There are new concepts for data storage on the horizon that will deliver secure solutions for storing and moving sensitive data around the world. ...
SoftLayer operates a global cloud infrastructure platform built for Internet scale. With a global footprint of data centers and network points of presence, SoftLayer provides infrastructure as a service to leading-edge customers ranging from Web startups to global enterprises. SoftLayer's modular architecture, full-featured API, and sophisticated automation provide unparalleled performance and control. Its flexible unified platform seamlessly spans physical and virtual devices linked via a world...
Companies can harness IoT and predictive analytics to sustain business continuity; predict and manage site performance during emergencies; minimize expensive reactive maintenance; and forecast equipment and maintenance budgets and expenditures. Providing cost-effective, uninterrupted service is challenging, particularly for organizations with geographically dispersed operations.
SYS-CON Events announced today TechTarget has been named “Media Sponsor” of SYS-CON's 18th International Cloud Expo, which will take place on June 7–9, 2016, at the Javits Center in New York City, NY, and the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. TechTarget is the Web’s leading destination for serious technology buyers researching and making enterprise technology decisions. Its extensive global networ...
SYS-CON Events announced today that Commvault, a global leader in enterprise data protection and information management, has been named “Bronze Sponsor” of SYS-CON's 18th International Cloud Expo, which will take place on June 7–9, 2016, at the Javits Center in New York City, NY, and the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. Commvault is a leading provider of data protection and information management...
The essence of data analysis involves setting up data pipelines that consist of several operations that are chained together – starting from data collection, data quality checks, data integration, data analysis and data visualization (including the setting up of interaction paths in that visualization). In our opinion, the challenges stem from the technology diversity at each stage of the data pipeline as well as the lack of process around the analysis.
A strange thing is happening along the way to the Internet of Things, namely far too many devices to work with and manage. It has become clear that we'll need much higher efficiency user experiences that can allow us to more easily and scalably work with the thousands of devices that will soon be in each of our lives. Enter the conversational interface revolution, combining bots we can literally talk with, gesture to, and even direct with our thoughts, with embedded artificial intelligence, wh...
Designing IoT applications is complex, but deploying them in a scalable fashion is even more complex. A scalable, API first IaaS cloud is a good start, but in order to understand the various components specific to deploying IoT applications, one needs to understand the architecture of these applications and figure out how to scale these components independently. In his session at @ThingsExpo, Nara Rajagopalan is CEO of Accelerite, will discuss the fundamental architecture of IoT applications, ...