Eight IP asks queasy shareholders to sit tight after Aurora fires a shot at the board
Link copied to
8IP Emerging Companies says it shareholders should sit tight while it rallies a defence against a hostile attack from Aurora Funds Management.
The fund manager is trying to roll the board of the listed tech investor (ASX:8EC), citing its involvement with Big Unlimited as a major concern.
Aurora (ASX:AOD), which owns 19.99 per cent of 8IP, said on Friday it was concerned about a lack of share price traction and the riskiness and lack of returns of some of 8IP’s companies.
It notes three specifically, saying 1-Page (ASX:1PG) had returned negative 97 per cent, Highfield Resources (ASX:HFR) negative 33 per cent, and Yowie Group (ASX:YOW) — a company it’s been involved in building a substantial stake in recently — negative 92 per cent.
Aurora has pointed a finger at an investment in beleaguered tech company Big UnLimited (ASX:BIG).
It cites a report in the AFR that says Big bought a subsidiary of a company partly owned by 8IP’s chief investment officer Kerry Series in November last year, who then bought 1 million Big shares for the 8IP fund.
“Aurora is concerned that Mr Series potentially used 8EC’s investable capital in support of, or connected to, a sale of one of his private assets.
“As at today, 8EC currently has approximately 2.5 per cent of its NTA in BIG, a company which entered a trading halt on 19 February 2018 and currently remains suspended on the Australian Stock Exchange, pending an ongoing investigation into its conduct,” Aurora said in its notice of general meeting, which has been publicly released by the ASX.
8IP said in early March that it actually bought the shares for $750,000 in June last year, and sold just under half of that stake “later” for a sum higher than the initial investment.
It said the stake was 2.5 per cent of the gross portfolio value as of March 1, which it considered modest given it typically invests in around 30 companies.
It also said that all trading in BIG shares by interests associated with Mr Series was made in accordance with 8IP’s staff securities trading policy.
Aurora said it had been speaking to 8IP for over 12 months about the “persistent share price discount to NTA”, but was yet to be satisfied with the response.
“Therefore, Aurora considers the proposed Board changes are necessary to ensure the fair treatment of all shareholders.”
Aurora wants to remove Mr Series, chairman Jonathon Sweeney and director Tony McDonald with Anthony Hartnell, John Patton, and Victor Siciliano.