(Alliance News) - AVI Japan Opportunity Trust PLC and AVI Global Trust PLC on Thursday said their investors have "expessed strong concerns" about Digital Garage.
AVI Japan Opportunity Trust is a London-based investment firm, which backs over-capitalised small-cap Japanese equities. AVI Global Trust is a Exeter, England-based investor in family-controlled holding companies, closed-end funds and asset-backed opportunities
AVI said investors have voiced concerns over Digital Garage's directors' credibility.
They said Digital Garage's actions have been "far removed from the corporate governance reforms underway in Japan."
The companies added that they intends to vote against the election of directors at next year's annual general meeting of shareholders.
"AVI is making this announcement before Digital Garage's FY24 Q2 earnings release, intending to get support from other long-term institutional investors and minority shareholders who have similar concerns," AVI adds.
AVI has been a shareholder of Digital Garage since 2018 and currently holds 3% of the company's shares.
"AVI believes that Digital Garage's poor performance, unconvincing growth strategy and inefficient
holding structure have resulted in the company trading around 40% below its intrinsic value," AVI said.
"In addition, the most significant issue relates to the composition of the board of directors, where AVI has repeatedly expressed strong concerns during its engagements, including the lack of payment business experience, the lack of independence and the average tenure. Specifically, three of the six outside directors have been with the company for more than 10 years and two outside directors Hiromi Ozaki and Makoto Sakai have conflicts of interest and are not in a position to impartially monitor and supervise Digital Garage."
Chief Executive Joe Bauernfreun said: "As a long-standing shareholder, we have had many constructive discussions with Digital Garage representatives over the past five years. While we are pleased that the company has emphasised the importance of the payments business through the 'DG FinTech Shift' strategy, we cannot stand idly by at the inaction of Digital Garage's board after years of underperformance and failure to address the valuation discount. "
By Sophie Rose, Alliance News senior reporter
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Avi Japan Oppo. (AJOT)
AVI Global Trust (AGT)