Ellerston to remove EGI fund from ASX following investor pressure

EGI will be restructured as an unlisted trust, a proposal which will be put to the company’s annual general meeting later this month, according a letter from Mr Jacob circulated to shareholders.


“In the absence of a better alternative, at this juncture, the Board believes that an orderly restructuring of the Company’s investment portfolio to a trust structure is the most appropriate path to liquidity while enabling a return closer to [net tangiable assets],” he wrote.

But Mr Jacob also took aim at other listed investment companies, many of which have suffered from lower share prices than the value of their assets.

“It’s important to note that the discount, while unacceptable, is an industry wide phenomena, with the listed global equity sector trading at an average discount of over 17 per cent ast at 30 September 2019, and is often a reflection of market sentiment volatility and other events which can reduce investor demand.”

Separately, Mr Jacob told this newspaper that “we’ve reached the midpoint [of our management mandate over the fund] and we’re not prepared to have this situation continue for another five years”.

The decision follows reports in The Sydney Morning Herald and The Age on October 30 that Mr Kingston, who is an EGI shareholder, had written to Mr Jacob describing the fund as “chronically flawed” and “untenable”.

“Most of the EGI shareholders are retail investors so I consider it is even more incumbent on the EGI directors to focus on protecting their ability to realise their investments … they are currently locked in the EGI cage and can only exit at a 20 per cent discount,” he wrote. In response, Mr Jacob conceded more work had to be done to increase the share price, but defended EGI’s performance.

EGI’s returns have been positive — 14.5 per cent in the last year and 9.43 per cent per annum for five years — but have only been marginally above its own benchmark, known as the MSCI World Index, in the long-term.


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