Shareholders have voted to replace existing board with three new directors
The GT Japan investment trust is set to wind up and offer investors a cash exit or access to a range of vehicles run by Invesco Perpetual.
It follows an EGM on 16 July at which shareholders voted to remove the existing board and replace it with three new directors committed to pushing through the changes.
Earlier this year, the original board removed Invesco as manager of the trust and replaced it with Sloane Robinson. Over three years, the trust underperformed the sector average by 40% and, in Invesco's final year with the fund, it underperformed the Topix Index by 31%.
At last week's EGM, 59 shareholders, representing 60% of the trust, outvoted 421 other shareholders to bring through changes which saw George Kershaw, Ian Stephenson and Phillip Stephens form the new board, with Stephens as chairman.
Intelli Corporate Finance has been appointed financial adviser to GT Japan and has been instructed to prepare proposals for the reconstruction of the company. These proposals are expected to be a cash exit for shareholders, a move to one of two Invesco Japan unit trusts or moving their assets into another investment trust, most likely Perpetual Japan.
Graham Proudfoot, managing director of specialist funds at Invesco, said the costs to the investor of these proposals will become apparent when they are formerly announced, as soon as Invesco has a schedule of how much it will it all cost.
While the outgoing board of GT Japan refused to comment, Proudfoot said that Invesco will continue to work with Sloane Robinson up to the reconstruction to get the best value for shareholders.
Proudfoot added: 'There are now stocks in the portfolio that Sloane Robinson know very well and we do not, so it would make sense to work closely together to continue to deliver value.'
Martin Fothergill, analyst at Deutsche, said: 'The board did not consult all of its shareholders before appointing Sloane Robinson and moving it away from Invesco. Sloane changed the way the fund was managed. It was run more like a hedge fund which, while an interesting style, clearly was not what the shareholders wanted.'
Fothergill said while boards are very much within their rights to charge fund managers if performance is poor, they must not lose sight of what the shareholders want, which in this case was a fund that directly invested in the Japanese market and Japanese currency.
Stephens said: 'It is unusual for a board to be appointed in such circumstances and with a specific mandate. The new board accepts its mandate and will work with Invesco, our advisers and shareholders, to put forward reconstruction proposals as quickly as possible and with the minimum of expense.'
Nick Greenwood, head of investment trusts at Christows, said that Invesco would have been confident in getting the resolutions passed before the requisition of an EGM.
The £92.7m portfolio has seen its share price fall by 33.2% over one year to 19 July, according to TrustNet data, compared with a fall of 26.6% in the Topix. Over three years the share price has risen 16%, against 27.4% for the index, and over five years the shares have returned -18.6%, against -25.8% for the Topix. As of the end of last week, the trust's shares were trading on a discount to NAV of 7.2%.
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