An attempt by Trilogy Funds Management (Trilogy) to replace LM Investment Management Ltd (LM) as Manager of two LM feeder funds is opportunistic, hostile and without any consideration of investors' interests.
This was the underlying sentiment within a counter response released by LM to a statement released by Trilogy asking unitholders to vote to replace LM as the Responsible Entity for the LM Wholesale First Mortgage Income Fund, and the LM Currency Protected Australian Income Fund, feeder funds of the LM First Mortgage Income Fund (FMIF).
Describing it as extraordinary, LM claims that Trilogy's action is based on inaccurate and misleading information, and it is not in the best interests of fund investors.
LM understands that the takeover bid was commenced by three (3) investors indirectly holding less than 10% of interests - not the 48% quoted by Trilogy - in the LM First Mortgage Income Fund, via its feeder funds.
The LM Wholesale First Mortgage Income Fund holds 20% investment in the FMIF, and the LM Currency Protected Australian Income Fund holds 24% investment in the FMIF.
Based on the communications that LM CEO, Peter Drake and his senior executives have had with clients (concerning investment in the fund), most support LM's continuing management of the funds.
"The information Trilogy is utilising to gain support is superficial at best. Trilogy has no knowledge of the assets of the fund," said Drake.
"It is important that investors understand the position of the fund and its assets entirely and comprehensively, before making any decision with respect to any offer or vote that Trilogy or any entity presents."
Given the strength of LM's in-house team of property experts, Drake questions the relevant property expertise of Trilogy, and their understanding of the intensive development management that needs to be applied to the assets.
"Further, our management fees for the First Mortgage Income Fund have been historically low, averaging 1.41%. These assets need to be worked through, not simply sold down, and certainly not to be offset by a rapidly diminishing unit price as proven by previous Trilogy takeovers," said Drake.
Far from offering any magic solution to investors in the funds, Drake compares the promises being made by Trilogy to those made to investors of City Pacific. The result of those promises saw the unit price slashed from 61 cents in December 2008 to 13 cents in June 2012.
"Investors in the LM funds would not want to see Trilogy achieve the same disastrous result for them", Drake concluded.
Around 150 delegates attended Financial Standard's inaugural Best Practice Forum in Managed Accounts held in Sydney in August. Financial Standard also launched a new magazine: FS Managed ... Watch video
What are the key challenges advisers face when building retirement portfolios for clients? Watch Joe Fernandes, Head of Global Investment Solutions at Colonial First State Global Asset Management. Watch video
The pool of investable funds in the retail sector is ever growing, and as investors become more sophisticated the appetite for global equities is only going to increase. In this video, Noble says with ... Watch video
At this year's PIMCO Secular Forum, the company's global executives set themselves the challenge of taking a three to five year view and anticipate where the market would be against what investors would ... Watch video