6 May 2010 09:15
Ashmore Global Opportunities Limited
Notice of Extraordinary General Meeting of Ashmore Global Opportunities Limited ("AGOL") on 26 May 2010 at 10.30 a.m.
·; The Board unanimously recommends that shareholders VOTE AGAINST the Wind-up Resolution as it believes the continuation of AGOL is in the best interests of shareholders
·; Given the Investment Manager's view of the embedded value within the Company's portfolio of Special Situations investments, the Board does not believe that winding-up the Company at this point in time would provide fair value of the Company's underlying investments for Shareholders
·; Given the continued scarcity of investment capital, the Board and the Investment Manager believe that the opportunity set in Special Situations remains strong
·; Up to US$17.7m to be returned to Shareholders by way of a combination of a special dividend and on market buybacks
·; The Board believes that the AGOL portfolio is well positioned and continues to offer an attractive investment opportunity
Jonathan Agnew, Chairman of Ashmore Global Opportunities Limited said:
"It is the Board's unanimous recommendation that shareholders should vote against the wind-up resolution. AGOL has achieved a well diversified portfolio of investments across a range of sectors and geographies which I believe should be given the opportunity to realise their true potential in line with its anticipated time horizon. The fundamentals which underpin Emerging Markets investing remain firmly intact, the opportunity set in special situations is strong, and therefore AGOL continues to offer an attractive investment opportunity."
Enquiries:
Penrose Financial
Gay Collins +44 207 786 4889 or +44 7798626282
PROPOSALS REGARDING THE CONTINUATION OF THE COMPANY, INFORMATION REGARDING THE COMPOSITION OF THE BOARD AND OTHER ORDINARY COURSE BUSINESS
Introduction and background
Ashmore Global Opportunities Limited (the "Company" or "AGOL") has today published a circular (the "Circular") containing details regarding the continuation of the Company and the composition of the Board. The Circular includes notice of an extraordinary general meeting of the Company to be held at the offices of Northern Trust International Fund Administration Services (Guernsey) Limited, Trafalgar Court, Les Banques, St Peter Port, Guernsey GY1 3QL on 26 May 2010 at 10.30 a.m. (the "EGM").
I. Continuation of the Company
The Company's Articles of Incorporation (the "Articles") incorporate discount management provisions requiring that the Board puts a resolution to Shareholders to wind-up, reorganise or reconstruct the Company if, in any rolling period of 365 days (or, in any leap year, 366 days) the Shares of any class or classes which together represent 75% or more of the NAV of the Company at the end of any such period have an average Daily NAV Variance for that period of equal to or less than minus 10%.
Over the 365 day period to 16 February 2010, Shares representing greater than 75% of the NAV of the Company traded at an average Daily NAV Variance of less than minus 10%. Therefore, the Board is convening the EGM at which a resolution to wind-up the Company (the "Wind-up Resolution") will be put to Shareholders. In order to be passed, the Wind-up Resolution requires greater than 75% of the votes cast to be voted in favour.
This document explains on page 17 why the Board believes that the continuation of the Company is in the best interests of Shareholders as a whole and therefore recommends that Shareholders VOTE AGAINST the Wind-up Resolution set out in the notice of the EGM on page 21.
II. Board composition
Notwithstanding that the Company is not required to comply with the board independence requirements set out in chapter 15 of the Listing Rules, your Board considers the independence of the Company from the Investment Manager and the balance of independent directors on the Board to be of considerable importance.
Since the Company's IPO in December 2007 one of the then independent Directors of the Company, George Grunebaum, has ceased to be independent due to Dolomite Capital Management Limited, of which he was a principal shareholder and Co-Chief Investment Officer, being acquired by Ashmore. Your Board therefore intends, subject to the Wind-up Resolution not being passed at the EGM, to invite Oliver T. (Tony) Kane and Christopher F.L. Legge to join the Board at the first Board meeting following the AGM, which is expected to be held in August 2010. George Grunebaum has indicated that he intends to resign from the Board after that meeting. The Board would like to thank George for the valuable contribution he has made as a director and Chairman of the Audit Committee since the IPO.
Tony Kane, who is a US resident, has 33 years experience in the field of Emerging Markets investment with JP Morgan, Equitable Capital Management Corporation, Australia and New Zealand Bank and, from 1999 to 2005, Ashmore. Tony has covered a broad range of corporate finance, credit, banking and private equity related activities in Emerging Markets, and we believe his experience will be of great value to the Board. For the last five years, Tony Kane has had no business relationship with Ashmore and your Board considers him to be independent.
Christopher Legge is a Guernsey resident and has over 25 years experience in financial services. He qualified as a Chartered Accountant in London in 1980 and spent the majority of his career based in Guernsey with Ernst & Young including being the senior partner of Ernst & Young in the Channel Islands. Christopher retired from Ernst & Young in 2003 and currently holds a number of directorships in the financial sector including the following investment companies of which he chairs the audit committee; BH Macro Limited, Goldman Sachs Dynamic Opportunities Limited and Third Point Offshore Investors Limited. Christopher is considered to be independent by the Board. Upon his appointment, it is expected that he will become Chairman of the Audit Committee.
Execution of Investment Objective
As stated in the Company's IPO Prospectus, the Company's investment objective is to deploy capital in a diversified portfolio of global Emerging Market strategies, with a principal focus on Special Situations. Consistent with this objective, the allocation to the Special Situations theme accounted for over 80% of AGOL's underlying exposure as at the end of March 2010, a decline of approximately 6% from March 2009, resulting from stronger relative performance in the more liquid strategies over the period and a capital distribution made from GSSF4. AGOL continues to have access to up to 25% guaranteed capacity in all future Special Situations vehicles managed by Ashmore.
Table 1: Allocation by investment at 31 March 2010
|
Name | Holding (% of AGOL NAV) |
Liquidity |
Investment description |
|
|
|
| Global Emerging Markets Special Situations investment fund with a 7 year fixed life and limited partnership structure |
|
|
|
| |
| Ashmore Global Special Situations Fund 4.......................................................................... |
|
| |
| 35.0% | 7 years | ||
|
|
|
|
|
|
|
|
| Asian special situations with investments mainly in corporate restructurings through distressed debt, private & public equity |
|
|
|
| |
|
|
|
| |
| Ashmore Asian Recovery Fund............................... | 20.8% | 07/11 | |
|
|
|
|
|
|
|
|
| See section 'Special Situations portfolio investments' below |
| AEI................................................................................ | 12.7% | N/A | |
|
|
|
|
|
|
|
|
| Global Emerging Markets special situations investment fund with a 7 year fixed life and limited partnership structure |
|
|
|
| |
| Ashmore Global Special Situations Fund 5.......................................................................... |
|
| |
| 10.8% | 7 years | ||
|
|
|
|
|
|
|
|
| Dynamic strategy investing across all Ashmore's investment themes |
| Ashmore Multi Strategy Fund.................................. | 6.4% | Monthly | |
|
|
|
|
|
|
|
|
| Focuses on the developing Emerging Markets corporate debt asset class providing exposure to select corporate sectors & issuers |
|
|
| Monthly | |
| Ashmore Emerging Markets Corporate High Yield Fund................................................................... |
| (90 days | |
| 5.7% | notice) | ||
|
|
|
|
|
|
|
|
| See section 'Special Situations portfolio investments' below |
| Brenco........................................................................... | 4.7% | N/A | |
|
|
|
|
|
|
|
|
| Daily dealing UCITS III fund with global exposure to Emerging Markets principally by investing in equities |
| Ashmore SICAV Emerging Markets Equity Fund............................................................................. |
|
| |
| 4.0% | Daily | ||
|
|
|
|
|
|
|
|
| See section 'Special Situations portfolio investments' below |
| Multi-Commodity Exchange...................................... | 2.1% | N/A | |
|
|
|
|
|
|
|
|
| Daily dealing UCITS III fund with global exposure to Emerging Markets principally by investing in corporate debt |
|
|
|
| |
| Ashmore SICAV Emerging Markets Corporate Debt Fund................................................................... |
|
| |
| 2.0% | Daily | ||
|
|
|
|
|
|
|
|
| Daily dealing UCITS III fund with global exposure to Emerging Markets principally by investing in local currency bonds |
|
|
|
| |
| Ashmore SICAV Emerging Markets Local Currency Bond Fund................................................. |
|
| |
| 1.6% | Daily | ||
|
|
|
|
|
|
|
|
| Daily dealing UCITS III fund with global exposure to Emerging Markets principally by investing in sovereign debt |
|
|
|
| |
| Ashmore SICAV Emerging Markets Sovereign Debt Fund................................................................... |
|
| |
| 1.2% | Daily | ||
|
|
|
|
|
|
|
|
| Russia focussed fund with a 7 to 9 year life, investing primarily in completed real estate assets across the retail, office and warehouse sectors |
|
|
|
| |
| Ashmore Russian Real Estate Recovery Fund............................................................................. |
|
| |
| 0.1% | 7-9 years | ||
|
|
|
|
|
|
|
|
| Focuses on yield, total return and capital appreciation primarily in dollar denominated sovereign and corporate debt, but may include special situations |
|
|
|
| |
| Ashmore Emerging Markets Liquid Investment Portfolio.................................................. |
|
| |
| 0.1% | Monthly | ||
|
|
|
|
|
|
|
|
| Cash & equivalents includes unencumbered bank balances and investments in marketable liquid instruments, encumbered cash backing derivatives and margin balances |
|
|
|
| |
|
|
|
| |
|
|
|
| |
| Cash & equivalents.................................................... | (7.1)% | N/A |
Source: Ashmore
Table 2: Investment allocation by investment theme (% of AGOL NAV)
|
(%) | Dec '07 | Mar '08 | Jun '08 | Sep '08 | Dec '08 | Mar '09 | Jun '09 | Sep '09 | Dec '09 | Mar '10 |
| Special Situations........ | 19.7 | 32.8 | 45.0 | 70.3 | 86.9 | 89.5 | 88.6 | 85.9 | 82.6 | 83.1 |
| External Debt................ | 27.5 | 19.8 | 19.4 | 11.1 | 5.8 | 6.2 | 5.7 | 7.4 | 9.8 | 2.9 |
| Local Currency............. | 33.5 | 36.8 | 28.4 | 17.9 | 3.1 | 0.0 | 0.8 | 0.8 | 0.7 | 1.8 |
| Corporate High Yield.. | 1.8 | 2.3 | 0.9 | 0.6 | 4.2 | 4.4 | 4.8 | 5.4 | 6.0 | 7.8 |
| Equity............................ | 17.5 | 8.3 | 6.4 | 0.0 | 0.0 | 0.0 | 0.0 | 0.5 | 1.0 | 4.4 |
Note:
| (1) | Allocation is shown by primary investment theme of the underlying funds or companies which AGOL is invested in or which the Ashmore Multi Strategy Fund is invested in, which in turn is invested in by AGOL. Allocation excludes cash and cash equivalents. |
Source: Ashmore
AGOL portfolio positioning
The Company has achieved a diversified investment portfolio exposure both in terms of geographical and industry/sector exposure.
Table 3: AGOL investment portfolio at 31 March 2010
|
| Geographic Region % of AGOL NAV |
| Country % of AGOL NAV |
| Sector % of AGOL NAV |
| Asia | 48.7 | Cayman Islands (AEI) | 18.5 | Electric | 19.0 |
| Americas | 32.7 | Singapore | 14.7 | Oil & Gas | 13.9 |
| CEE/CIS | 11.4 | Philippines | 12.6 | Oil & Gas Services | 10.6 |
| MENA | 7.2 | India | 11.6 | Telecommunications | 9.9 |
|
|
| Brazil | 11.4 | Real Estate | 8.6 |
|
|
| Russian Federation | 5.4 | Media | 7.4 |
|
|
| Thailand | 4.6 | Energy - Alternate Sources | 6.8 |
|
|
| Indonesia | 3.4 | Diversified Financial Services | 5.4 |
|
|
| Saudi Arabia | 2.3 | Banks | 3.0 |
|
|
| Israel | 2.2 | Environmental Control | 1.9 |
|
|
| Kazakhstan | 2.1 | Transportation | 1.9 |
|
|
| Ukraine | 1.6 | Sovereign | 1.8 |
|
|
| China | 1.4 | Advertising | 1.3 |
|
|
| United Arab Emirates | 1.3 | Retail | 1.1 |
|
|
| Mexico | 1.2 | Agriculture | 0.5 |
|
|
| Other Countries | 5.7 | Other Industries | 6.9 |
Source: Ashmore
Investment performance of the Company
Since its IPO, the Company has delivered a solid investment performance during a period of considerable volatility in global markets. The following table shows the monthly NAV performance by Share class as compared with principal traditional Emerging Market equity and bond indices over the periods shown:
Table 4: AGOL monthly NAV performance by share class
|
(%) | Dec '07(1) | Jan '08 | Feb '08 | Mar '08 | Apr '08 | May '08 | Jun '08 | Jul '08 | Aug '08 | Sep '08 | Oct '08 | Nov '08 | Dec '08 | Jan '09 | Feb '09 |
| US$ class......... | (0.20) | (2.10) | 1.78 | (0.20) | 0.10 | 1.31 | (0.70) | 0.40 | (2.09) | (4.68) | (6.20) | (0.68) | (1.61) | (0.82) | (1.06) |
| € class............... | (0.20) | (2.00) | 1.89 | (0.10) | 0.20 | 1.50 | (0.69) | 0.70 | (1.98) | (4.74) | (9.10) | (0.58) | (1.05) | (1.54) | (0.96) |
| £ class.............. | (0.10) | (2.00) | 1.93 | (0.10) | 0.40 | 1.50 | (0.49) | 0.69 | (1.96) | (4.51) | (7.24) | (1.24) | (2.29) | (0.59) | (0.94) |
| MSCI EM......... | (2.09) | (12.59) | 7.25 | (5.40) | 7.87 | 1.55 | (10.16) | (4.16) | (8.22) | (17.71) | (27.50) | (7.63) | 7.60 | (6.62) | (5.71) |
| JPM EMBIGD.. | 0.13 | 0.77 | (0.11) | (0.05) | 0.95 | 0.12 | (1.96) | 1.03 | 0.74 | (6.68) | (16.03) | 2.96 | 7.46 | 1.33 | (1.11) |
| ELMI+.............. | (0.21) | 1.39 | 1.92 | 1.32 | 1.34 | 1.68 | 0.80 | 2.21 | (3.48) | (3.80) | (8.73) | (1.22) | 3.34 | (5.69) | (1.85) |
|
(%) | Mar '09 | Apr '09 | May '09 | Jun '09 | Jul '09 | Aug '09 | Sep '09 | Oct '09 | Nov '09 | Dec '09 | Jan '10 | Feb '10 | Mar '10 | Cumulative to Mar '10 |
| US$ class......... | 1.07 | (2.12) | 3.24 | (1.63) | (2.25) | 1.09 | 3.23 | 2.32 | (0.68) | (0.34) | (0.80) | (0.92) | 2.68 | (5.31) |
| € class............... | 0.97 | (2.04) | 3.07 | (1.55) | (2.42) | 1.12 | 3.19 | 2.14 | (0.70) | (0.35) | (0.94) | (0.95) | 2.75 | (6.44) |
| £ class.............. | 0.95 | (2.36) | 3.02 | (1.52) | (2.14) | 1.09 | 3.37 | 2.21 | (0.68) | (0.34) | (0.81) | (1.04) | 2.81 | (5.54) |
| MSCI EM......... | 14.15 | 16.28 | 16.66 | (1.53) | 10.87 | (0.54) | 8.88 | 0.02 | 4.25 | 3.81 | (5.65) | 0.25 | 7.95 | (9.53) |
| JPM EMBIGD.. | 3.63 | 5.55 | 4.07 | 1.44 | 3.19 | 2.01 | 4.90 | 0.15 | 1.09 | 0.37 | 0.38 | 1.36 | 2.48 | 7.94 |
| ELMI+.............. | 3.77 | 4.26 | 4.55 | 1.08 | 2.33 | 0.34 | 1.74 | 0.19 | 1.77 | (0.90) | (0.35) | 0.02 | 1.74 | 3.68 |
Note:
| (1) | Performance from inception (12-Dec-07) to month end (31-Dec-07). |
Sources: Ashmore, Bloomberg
While AGOL's NAV performance has remained relatively resilient, its share price has been more volatile, in line with the volatility seen in broader Emerging Markets indices.
Table 5: AGOL share price performance by share class
|
| 3 month (%) | 6 month (%) | 12 month (%) |
| US$ class | 7.38 | (0.99) | 31.70 |
| € class..... | 7.69 | 0.72 | 32.08 |
| £ class..... | 6.15 | (1.99) | 24.32 |
Note:
| (1) | As at 31 March 2010. Based on last traded prices. |
Sources: Ashmore, Bloomberg
While share price performance over the last 12 months has been strong, the Shares remain below their offer price and have underperformed the MSCI EM index over this period. In Ashmore's opinion, this underperformance is not unexpected given that there can often be a lag effect between rises in public market valuations being reflected into private equity portfolios. Ashmore's funds utilise a robust and consistent valuation methodology based upon third-party valuations which is applied independently of the Investment Manager. Ashmore believes there to be embedded value within AGOL's existing portfolio assets which may be recognised as such assets are realised but which is not necessarily recognised by such valuations.
Investment outlook
The global recovery began in March last year and has continued with minor interruptions through the rest of 2009. It has so far extended into 2010, and Ashmore expects this to continue, although not without some volatility. Ashmore expects global growth to reach at least 4% in 2010 with emerging economies growing in excess of 6% in real terms, which is about three times faster than the average growth rate in developed economies.
Emerging Markets assets continued to recover strongly in the second half of 2009, with Emerging Markets continuing to be the strongest part of the global economy. US and European economies have now emerged from recession, and cross-border financial flows are increasing considerably which provides support for Emerging Markets.
Ashmore has identified a number of factors which continue to support the investment case for Emerging Markets assets including:
• A stronger, predominantly domestic, demand led recovery in Emerging Markets economies;
• A continued shift in economic power to China and Emerging Markets in general;
• Greater importance of the G20 in policy making relative to the G7;
• Increased investor asset allocations to Emerging Markets;
• Reducing reserve levels in Emerging Markets leading to a diversification out of Treasuries and dollar denominated assets;
• The existence of still-plentiful liquidity (excess reserves of deposit taking banks at the Federal Reserve still exceeds US$1 trillion) and a backdrop of commodity supply-constraints; and
• Strengthening Emerging Markets currencies.
The investment outlook above represents the views and beliefs of the Investment Manager as at the date of this document. No assurance can be given that the views and beliefs represented will be reflected by actual events. Shareholders' attention is drawn to the section headed 'Important Information' at the start of this document. The investment outlook above discussed general underlying market activity, industry or sector trends or other broad based economic, market or political conditions. It should not be construed as research or investment advice, or a recommendation, invitation or inducement to buy or sell investments in the Company or any other investments mentioned in this document or to follow any investment strategy. Past performance is not indicative of future results, which may vary.
Special Situations investment review
Over the past year, the Company has maintained its diversified exposure to Special Situations across a broad range of geographies and industry sub-sectors. Together with Ashmore, the Board has been focused on increasing the level of information disclosed on the Special Situations portfolio in the monthly fund updates. As a result, the Company's geographic and industry exposure has been regularly reported to Shareholders throughout the year, together with detailed updates on recent events and developments in the underlying investments.
Special Situations portfolio investments
As at 31 March 2010, the Company's largest underlying investments by NAV comprised the following:
Table 6: AGOL's largest ten underlying special situations investments
|
| % of AGOL NAV |
Country |
Sector |
| AEI............................................. | 18.5 | Cayman | Utilities |
| Brenco....................................... | 9.6 | Brazil | Energy |
| Petron........................................ | 8.7 | Philippines | Energy |
| Jasper......................................... | 6.0 | Singapore | Energy |
| Digicable................................... | 5.0 | India | Telecommunications |
| Pacnet........................................ | 4.4 | Singapore | Telecommunications |
| Rubicon..................................... | 4.0 | Singapore | Energy |
| Multi-Commodity Exchange... | 3.3 | India | Financials |
| Bangkok Land.......................... | 2.8 | Thailand | Real Estate |
| Alphaland................................. | 2.3 | Philippines | Real Estate |
Source: Ashmore
Special Situations investment opportunities and portfolio activity
As risk perceptions change over the course of the economic recovery, Ashmore expects to see a global re-balancing in 2010 with investors likely to be inclined to increase their exposure to Emerging Markets assets, especially those with improving fundamentals and good potential for upside versus developed markets. This is expected to be particularly positive for the Special Situations investments in the portfolio.
While 2009 was a difficult and challenging environment across global markets, Ashmore believes that the current economic climate continues to present opportunities across the full Special Situations spectrum, enabling it to utilise its skills in both distressed debt and private equity investing. Added to which, as envisaged at the time of the Company's IPO, the permanent nature of the Company's capital has recently enabled the Company to make a number of direct investments into Special Situations investments. A previous example of this was the direct investment which AGOL made in AEI during November 2008. During 2010, AGOL has also made direct investments into Brenco, a Brazilian renewable energy equipment company for production of ethanol and electricity from sugar cane, and Multi Commodity Exchange of India, a commodity futures exchange trading platform.
Notwithstanding the global market backdrop, Ashmore has been active in realising a number of investments from within the underlying Special Situations portfolios generating good returns for fund investors. As a result of realisations within GSSF4, AGOL received a capital distribution of US$27.6m which was initially reinvested into more liquid strategies. In January 2010, AGOL received an entitlement to a capital distribution of US$5.0m from GSSF5. This was committed to GSSF5 to increase AGOL's total commitment to US$55.0m. Both GSSF4 and GSSF5 are still within their investment periods, however Ashmore's investment approach is to identify when capital can be realised and redeployed for higher returns. In such circumstances, gains from realisations are distributed to investors. Such realisations highlight Ashmore's continued ability to generate strong returns in a range of market conditions.
Summary information in relation to the GSSF4 and GSSF5 realisations is set out below:
Table 7a: GSSF4 Distribution (December 2009)
|
Realisations | Realised capital gain US$m | Capital available for re-investment US$m(1) |
Total IRR(2) |
| Global Village Telecom.............. | 130.4 | 89.2 | 203% |
| Mirabela Nickel.......................... | 18.5 | 11.7 | 5,972% |
| Other investments..................... | 3.5 | 51.6 | - |
| Total distribution....................... | 152.4 |
|
|
| Of which received by AGOL.... | 27.6 |
|
|
Table 7b: GSSF5 Distribution (January 2010)
|
Realisations | Realised capital gain US$m | Capital available for re-investment US$m(1) |
Total IRR(2) |
| Global Village Telecom................... | 8.9 | 10.3 | 793% |
| Nakheel Development.................... | 3.7 | 15.3 | 66% |
| Other investments........................... | 0.1 | 11.9 | - |
| Total distribution............................ | 12.8 |
|
|
| Of which received by AGOL(3)..... | 5.0 |
|
|
Notes:
| (1) | Acquisition cost and income withheld for subsequent Investment during the investment period. |
|
|
|
| (2) | Total IRR includes the unrealised capital gain where applicable and is shown net of all deal related expenses, including legal fees and commissions. |
|
|
|
| (3) | Distribution rolled-over to increase AGOL's commitment to GSSF5. |
Source: Ashmore
In line with its investment approach, Ashmore continually reviews the investment portfolio for realisation and redeployment opportunities and, as such, there are a number of assets within AGOL's existing portfolio which may be partially or fully realised during 2010 providing a regenerated capital source for re-investment into further vintages of Special Situations investments.
Discount mitigation actions and Share repurchases
Despite the resilient investment performance delivered by the Company over the past 12 months, AGOL Shares have continued to trade a discount to their NAV.
The evolution of the Daily NAV Variance and the rolling 12 month Daily NAV Variance is set out below:
Table 8: Daily NAV Variance
|
|
Daily NAV Variance | Rolling 12 month average Daily NAV Variance | ||||
|
(%) | 31 Mar '10 | 31 Dec '09 | 30 June '09 | 31 Mar '10 | 31 Dec '09 | 30 June '09 |
| US$ class | 18.7 | 25.9 | 32.0 | 25.7 | 28.8 | 24.0 |
| € class..... | 16.2 | 23.9 | 32.8 | 24.1 | 27.1 | 21.5 |
| £ class..... | 19.1 | 25.5 | 32.0 | 24.6 | 27.6 | 22.3 |
Sources: Ashmore, Bloomberg
As described in the IPO Prospectus, the Company was established with the ability to buy back Shares in the market of up to 14.99% of the Shares of each class and to hold any such Shares bought back in treasury. The IPO Prospectus also stated that the Directors may utilise the Share repurchase authority to address any imbalance in the supply of and demand for Shares and may do so actively if the closing price of any class of Shares is 5% or more below the most recently published NAV of the shares of that class. In accordance with these provisions, during 2008 and 2009 the Board bought back Shares and continues to hold these Shares in treasury.
Throughout the year the Board has remained in close contact with its advisers and brokers, specifically in relation to the balance between the supply and demand for the Shares. In light of the fact that the buying back of Shares in February 2009 was ineffective in reducing the Daily NAV Variance, no further repurchases have been undertaken subsequently. The Board has noted that subsidiaries of Ashmore Group plc and a number of Ashmore's executives acquired Shares during 2009 and 2010, and believes that this demonstrates the confidence which the Investment Manager has in the AGOL investment proposition.
A summary of the Company's holding in treasury shares is set out below:
Table 9: Shares repurchased
|
|
Shares repurchased | % of share class(1) |
Cost |
| US$ class | 491,480 | 2.2 | $ 3,714,457 |
| € class..... | 331,346 | 5.2 | € 2,334,642 |
| £ class..... | 277,916 | 1.4 | £ 2,018,843 |
Note:
| (1) | Percentage of share class figures based on shares in issue excluding treasury shares following 20 January 2010 conversion. |
Source: Ashmore
The Board intends to continue to consider Share repurchases in the context of mitigating any future Daily NAV Variance, taking into account the Company's available liquid resources and future cash flow requirements of the Company. The Board will seek to ensure that any future Share repurchases are undertaken at prices which are in the best interests of all Shareholders. In current market conditions, Shareholders should not expect that share repurchases alone will succeed in materially reducing the Daily NAV Variance.
In the event that the Daily NAV Variance continues at current levels, the Board will be required to call another extraordinary general meeting at which it will put forward proposals to wind up, reorganise or reconstruct the Company based on the 365 day period to 17 February 2011.
Capital return
In line with the arrangements established during 2009, and as communicated to Shareholders in the Company's annual report and accounts for the 2009 financial year, the Company will be returning up to US$17.7m to Shareholders by way of a combination of a special dividend of US$10.0m and on market buybacks of up to US$7.7m. The total amount being returned represents 50% of the positive NAV performance generated by the Company over the 12 month period to December 2009.
A subsequent capital return may be made following the end of the 12 month period to 31 December 2010. The decision whether to make a partial return of capital in any year and, if so, its price and size, will be taken by the Board, and may be for an amount representing up to 50% of the positive NAV performance of the Company for the prior financial year. Whether such a return is made in any particular year and, if so, the amount of the return, may depend, among other things, on prevailing market conditions, the availability of sufficient liquidity, previous experience and applicable legal, regulatory and tax considerations.
Notwithstanding that US$17.7m is being returned to Shareholders in relation to the 2009 financial year, it is the Board's intention to grow the Company's NAV over time in order to obtain a greater diversification of exposure to different investments, geographies and investment vintages. Furthermore, the percentage of the positive NAV performance returned to Shareholders in respect of the 2009 financial year should not be taken as an indication of the likely level of capital returns in the future.
It should be noted that the proposed return in relation to the 2009 financial year is in addition to the Company's existing discount control measures, which include the ability to make market purchases of Shares and the obligation to propose a further wind up resolution if, in any rolling 365 day period, the average Daily NAV Variance is less than minus 10%, as described more fully in the IPO Prospectus and the Articles.
Rationale for continuation
The Board continues to believe that there are a number of benefits for Shareholders in VOTING AGAINST the Wind-up Resolution:
• The Board and Ashmore remain of the view that the fundamentals which underpin the attractions of Emerging Markets investing are strong and that this should lead to incremental investment returns over time;
• The Board considers it appropriate to provide the underlying portfolio investments the opportunity to realise their true potential in line with the investment time horizon as anticipated at the time of investment;
• Given the Investment Manager's view of the embedded value within the Company's portfolio of Special Situations investments, the Board does not believe that winding-up the Company at this point in time would provide fair value of the Company's underlying investments for Shareholders;
• Given the continued scarcity of investment capital, the Board and the Investment Manager believe that the opportunity set in Special Situations remains strong;
• Due to the liquidity profile and structure of the Company's underlying investments, if the Wind-up Resolution was passed, it is anticipated that it would take a number of years to liquidate the Company and return cash to Shareholders;
• The Board and Ashmore believe that the AGOL portfolio is well positioned and continues to offer an attractive investment opportunity;
• AGOL is continuing to diversify its exposure to underlying Special Situations investments and has been able to invest directly in attractive opportunities; and
• The capital return in relation to the 2009 financial year provides a mechanism by which Shareholders can realise a proportion of the NAV increase.
EXPECTED TIMETABLE
| Latest time and date for receipt of Proxy forms............................................................................................................. | 10.35 a.m. 24 May |
| Extraordinary General Meeting of the Company........................................................................................................... | 10.30 a.m. 26 May |
| Annual General Meeting of the Company...................................................................................................................... | 10.35 a.m. 26 May(1) |
All references are to London time
Note:
| (1) | Or as soon thereafter as the EGM concludes its business. |
IMPORTANT INFORMATION
The terms used in this announcement shall, unless the context otherwise requires, bear the meanings given to them in the Circular dated 3 May 2010.
The statements, including any forward-looking statements contained herein are made as at the date of this document, unless some other time is specified in relation to them, and service of this document shall not give rise to any implication that there has been no change in the facts set forth herein since such date.
This document includes statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements can be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "projects", "anticipates", "expects", "intends", "may", "will" or "should" or, in each case, their negative or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts. They include statements regarding the intentions, beliefs or current expectations of the Company or Ashmore concerning, amongst other things, the investment performance prospects of the Company and the markets in which it invests. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. A number of factors could cause actual results and developments to differ materially from those expressed or implied by the forward-looking statements.
Forward-looking statements are not guarantees of future performance. The Company's actual investment performance may differ materially from the impression created by the forward-looking statements contained in this document. These forward-looking statements are based on numerous assumptions regarding the present and future business strategies of the Company and the environment in which it will operate in the future. All forward-looking statements included in this document are based on information available to the Company on the date hereof. Shareholders should not place undue reliance on such forward looking statements, and the Company does not undertake any obligation to update publicly or revise any forward-looking statements, save as required by the Listing Rules or any other applicable law or regulation.