Welcome!

Microsoft Cloud Authors: Stackify Blog, Liz McMillan, David H Deans, Automic Blog, Pat Romanski

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
The explosion of new web/cloud/IoT-based applications and the data they generate are transforming our world right before our eyes. In this rush to adopt these new technologies, organizations are often ignoring fundamental questions concerning who owns the data and failing to ask for permission to conduct invasive surveillance of their customers. Organizations that are not transparent about how their systems gather data telemetry without offering shared data ownership risk product rejection, regu...
In his keynote at @ThingsExpo, Chris Matthieu, Director of IoT Engineering at Citrix and co-founder and CTO of Octoblu, focused on building an IoT platform and company. He provided a behind-the-scenes look at Octoblu’s platform, business, and pivots along the way (including the Citrix acquisition of Octoblu).
SYS-CON Events announced today that SoftLayer, an IBM Company, has been named “Gold Sponsor” of SYS-CON's 18th Cloud Expo, which will take place on June 7-9, 2016, at the Javits Center in New York, New York. SoftLayer, an IBM Company, provides cloud infrastructure as a service from a growing number of data centers and network points of presence around the world. SoftLayer’s customers range from Web startups to global enterprises.
Multiple data types are pouring into IoT deployments. Data is coming in small packages as well as enormous files and data streams of many sizes. Widespread use of mobile devices adds to the total. In this power panel at @ThingsExpo, moderated by Conference Chair Roger Strukhoff, panelists will look at the tools and environments that are being put to use in IoT deployments, as well as the team skills a modern enterprise IT shop needs to keep things running, get a handle on all this data, and deli...
SYS-CON Events announced today that Grape Up will exhibit at SYS-CON's 21st International Cloud Expo®, which will take place on Oct. 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. Grape Up is a software company specializing in cloud native application development and professional services related to Cloud Foundry PaaS. With five expert teams that operate in various sectors of the market across the U.S. and Europe, Grape Up works with a variety of customers from emergi...
20th Cloud Expo, taking place June 6-8, 2017, at the Javits Center in New York City, NY, will feature technical sessions from a rock star conference faculty and the leading industry players in the world. Cloud computing is now being embraced by a majority of enterprises of all sizes. Yesterday's debate about public vs. private has transformed into the reality of hybrid cloud: a recent survey shows that 74% of enterprises have a hybrid cloud strategy.
SYS-CON Events announced today that Super Micro Computer, Inc., a global leader in compute, storage and networking technologies, will exhibit at SYS-CON's 20th International Cloud Expo®, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY. Supermicro (NASDAQ: SMCI), the leading innovator in high-performance, high-efficiency server technology, is a premier provider of advanced server Building Block Solutions® for Data Center, Cloud Computing, Enterprise IT, Hadoop/...
Amazon has gradually rolled out parts of its IoT offerings in the last year, but these are just the tip of the iceberg. In addition to optimizing their back-end AWS offerings, Amazon is laying the ground work to be a major force in IoT – especially in the connected home and office. Amazon is extending its reach by building on its dominant Cloud IoT platform, its Dash Button strategy, recently announced Replenishment Services, the Echo/Alexa voice recognition control platform, the 6-7 strategic...
Bert Loomis was a visionary. This general session will highlight how Bert Loomis and people like him inspire us to build great things with small inventions. In their general session at 19th Cloud Expo, Harold Hannon, Architect at IBM Bluemix, and Michael O'Neill, Strategic Business Development at Nvidia, discussed the accelerating pace of AI development and how IBM Cloud and NVIDIA are partnering to bring AI capabilities to "every day," on-demand. They also reviewed two "free infrastructure" pr...
Judith Hurwitz is president and CEO of Hurwitz & Associates, a Needham, Mass., research and consulting firm focused on emerging technology, including big data, cognitive computing and governance. She is co-author of the book Cognitive Computing and Big Data Analytics, published in 2015. Her Cloud Expo session, "What Is the Business Imperative for Cognitive Computing?" is scheduled for Wednesday, June 8, at 8:40 a.m. In it, she puts cognitive computing into perspective with its value to the busin...
SYS-CON Events announced today that Hitachi, the leading provider the Internet of Things and Digital Transformation, will exhibit at SYS-CON's 20th International Cloud Expo®, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY. Hitachi Data Systems, a wholly owned subsidiary of Hitachi, Ltd., offers an integrated portfolio of services and solutions that enable digital transformation through enhanced data management, governance, mobility and analytics. We help globa...
Cognitive Computing is becoming the foundation for a new generation of solutions that have the potential to transform business. Unlike traditional approaches to building solutions, a cognitive computing approach allows the data to help determine the way applications are designed. This contrasts with conventional software development that begins with defining logic based on the current way a business operates. In her session at 18th Cloud Expo, Judith S. Hurwitz, President and CEO of Hurwitz & ...
Financial Technology has become a topic of intense interest throughout the cloud developer and enterprise IT communities. Accordingly, attendees at the upcoming 20th Cloud Expo at the Javits Center in New York, June 6-8, 2017, will find fresh new content in a new track called FinTech.
SYS-CON Events announced today that Interoute, owner-operator of one of Europe's largest networks and a global cloud services platform, has been named “Bronze Sponsor” of SYS-CON's 20th Cloud Expo, which will take place on June 6-8, 2017 at the Javits Center in New York, New York. Interoute is the owner-operator of one of Europe's largest networks and a global cloud services platform which encompasses 12 data centers, 14 virtual data centers and 31 colocation centers, with connections to 195 add...
The age of Digital Disruption is evolving into the next era – Digital Cohesion, an age in which applications securely self-assemble and deliver predictive services that continuously adapt to user behavior. Information from devices, sensors and applications around us will drive services seamlessly across mobile and fixed devices/infrastructure. This evolution is happening now in software defined services and secure networking. Four key drivers – Performance, Economics, Interoperability and Trust ...
Grape Up is a software company, specialized in cloud native application development and professional services related to Cloud Foundry PaaS. With five expert teams that operate in various sectors of the market across the USA and Europe, we work with a variety of customers from emerging startups to Fortune 1000 companies.
Cybersecurity is a critical component of software development in many industries including medical devices. However, code is not always written to be robust or secure from the unknown or the unexpected. This gap can make medical devices susceptible to cybersecurity attacks ranging from compromised personal health information to life-sustaining treatment. In his session at @ThingsExpo, Clark Fortney, Software Engineer at Battelle, will discuss how programming oversight using key methods can incre...
The Internet of Things is clearly many things: data collection and analytics, wearables, Smart Grids and Smart Cities, the Industrial Internet, and more. Cool platforms like Arduino, Raspberry Pi, Intel's Galileo and Edison, and a diverse world of sensors are making the IoT a great toy box for developers in all these areas. In this Power Panel at @ThingsExpo, moderated by Conference Chair Roger Strukhoff, panelists discussed what things are the most important, which will have the most profound e...
@ThingsExpo has been named the Most Influential ‘Smart Cities - IIoT' Account and @BigDataExpo has been named fourteenth by Right Relevance (RR), which provides curated information and intelligence on approximately 50,000 topics. In addition, Right Relevance provides an Insights offering that combines the above Topics and Influencers information with real time conversations to provide actionable intelligence with visualizations to enable decision making. The Insights service is applicable to eve...
SYS-CON Events announced today that Super Micro Computer, Inc., a global leader in compute, storage and networking technologies, will exhibit at SYS-CON's 20th International Cloud Expo®, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY. Supermicro (NASDAQ: SMCI), the leading innovator in high-performance, high-efficiency server technology, is a premier provider of advanced server Building Block Solutions® for Data Center, Cloud Computing, Enterprise IT, Hadoop/...