cash back for investors if discount to net asset value exceeds 10% for three Months running
Swiss investment company of hedge funds Altin has offered investors cash back on their investments if its discount to net asset value (NAV) exceeds 10% for three months running.
Altin will pay shareholders 10% of the trust's NAV per share or will buy back shares at 95% of NAV if the share price trades at a discount between 10% to 20% for a specified three-month period.
In addition, if shares trade at a discount of more than 20% during that time, the fund of funds manager has promised shareholders a 50% return of NAV per share.
A decision on which of the two dividends to pay will be made at Altin's annual shareholder meeting on 25 June, which marks the end of the three-month period. Ultimately, paying shareholders the dividend will bridge the gap between the discount and the NAV. Altin's motivation is to shorten that gap so it does not have to shave too substantial a sum of the fund's net assets of $230m.
Sophie Quincerot, investor relations manager at Altin, said the strategy would stabilise the share price's volatility and protect the fund from hostile bids.
She said: 'Our competitors are trading at between 15% and 20% discount. At the end of March, AIS's share price was 11% below the fund's NAV, Hendersons' was 15%, HSBC's was 5%, while Man's was 17%.
'Our investors will see that we are committed to making this work and this makes everyone see in the same direction.'
Altin has been a target for hostile takeovers before and any excess discount on its share price against the fund's value could leave it vulnerable, said Quincerot.
'In spring 2001, Julius Baer attempted a hostile takeover of our fund because it wanted access to our underlying managers, the majority of whom were closed to investment by then, but this was rejected by 75% of shareholders,' she added.
Altin's portfolio currently consists of 33 underlying managers, 78% of which are closed to new investment.
No fund makes up more than 7% of Altin's NAV.
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