Crystal Amber Fund (CRS) have requisitioned a General Meeting at Allied Minds (ALM). Allied Minds is an investment company that invests in technology and life science businesses such as university spin-outs focused on the USA.
Crystal Amber aim to remove most of the board of Allied Minds and appoint two new directors. They claim the board has not acted in the best interests of shareholders with excessive HQ costs, insufficient excess cash distribution to shareholders and failure to deal with the excessive discount to net asset value (currently over 40%).
They also criticise the management incentive scheme that pays out 10% of gains on individual holdings while ignoring losses incurred across the whole portfolio. Comment: this is the kind of incentive agreement seen in some VCTs to which I have always objected as it’s simply irrational.
You can read more about the reasons for the requisition in an RNS announcement from Crystal Amber. There has been no reaction at the time of writing from Allied Minds.
Comment: Looking at the historic track record of Allied Minds this has been a less than successful company. The share price peaked at 700p in mid-2015 after listing in 2014 and is now about 50p. I always favour such requisitions when companies clearly need a revolution and regret that we do not see them more frequently. Engagement behind the scenes, as was apparently attempted by Crystal Amber, is rarely successful in achieving substantial change. Shareholders can make their own mind up about the votes at the General Meeting but they should also urge the board of Allied Minds not to waste a great deal of money (i.e. shareholders’ funds) on defending against it. That often happens in such circumstances.
Note: I have had never had an interest in either company.
Roger Lawson (Twitter: https://twitter.com/RogerWLawson )