Ventus 2 VCT PLC Investment Management Agreement update (8235U)
31 Juillet 2020 - 4:58PM
UK Regulatory
TIDMVEN2 TIDMVNC TIDMVND
RNS Number : 8235U
Ventus 2 VCT PLC
31 July 2020
Ventus 2 VCT plc (the "Company")
Investment Management Agreement update
Your Board is focused on delivering shareholder value. The
directors are therefore pleased to announce that an extension to
the Investment Management Agreement (IMA) with Temporis has been
agreed, with a further reduction in annual investment management
fees from 1.50% to 1.15% of Net Asset Value (NAV) from 1 August
2022. The term is extended until 31 July 2025, although to retain
strategic flexibility the contract can be exited with one year's
notice should any Continuation Vote be a vote to not continue as a
VCT or shareholders accept an offer for the Company or the Company
merges with another company. In the event of an accepted offer or
completed merger, an incentive fee will be payable to Temporis that
is equivalent to that amount due to Temporis had the underlying
assets of the Company been sold. On a sale or merger, the existing
perpetual incentive fee entitlement will terminate.
Including run rate Other costs (excluding exceptional items),
directors' fees and audit fees, the Ongoing Charges Ratio (OCR) is
therefore expected to fall to below 2.0% from August 2022 (based on
constant NAV), as compared with an average of 3.2% for the years
ended February 2019 and February 2020. As stated in the Annual
Report, the Board has identified further cost reductions that can
be achieved after the completion of the share class merger. The
Board's objective is to have the lowest run rate OCR of any
renewables VCT by the end of 2022.
The Board's review of the management fees across the industry
demonstrates that this is an excellent result for shareholders.
1.15% matches the lowest fee paid by any renewables VCT and the
cost per MW is approximately 25% lower than that charged by the two
large listed infrastructure funds with a focus on wind assets.
The Board considered the possibility of directly managing the
assets before entering into this contract extension. Some of the
reasons why the Board has determined that the extended IMA term is
a better outcome for shareholders are set out below.
- The savings of self-management relative to the extended term
are estimated to have a present value equivalent to approximately
1% of NAV in the next 5 years.
- These potential savings are small relative to the wide range
of risks that the Company is exposed to.
- Temporis provide a resilient resourced service with access to
an experienced team of over 20 people across four different
functional areas, whereas self-management would be dependent on the
performance and availability of a small number of individuals.
- Self-management would increase uncertainty. There is no
precedent for self-management of a comparable VCT. The Company owns
shares in a number of investee companies that do not have executive
management teams and the Investment Manager is involved
continuously in their operation.
- Temporis continues to perform well in its role as Investment Manager.
This agreement has been concluded prior to the earliest possible
date at which notice could have been served under the current IMA
(2 years notice to be given no earlier than 31 July 2020 to expire
31 July 2022), thereby maximising the savings for shareholders. The
extended IMA will also enable the Board to provide shareholders
with a clearer comparison of the economics for continuation or wind
up as part of their recommendation for the Additional Continuation
Vote.
The revised terms, which have been agreed with the Company's
investment manager, a related party of the Company under the
Listing Rules, are considered a smaller related party transaction
under the Listing Rules 11.1.10. Your Board, who have been so
advised by the Company's Sponsor, Howard Kennedy Corporate Services
LLP, consider these proposals to be fair and reasonable as far as
the Company's shareholders are concerned.
This information is provided by RNS, the news service of the
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of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
UPDFLFESDRILVII
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