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Albion Venture (AAVC) 2018/19 results

Sophisticated and complex high-risk tax-sensitive investments in small companies: handle with care
londoninvestor
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Re: Albion Venture (AAVC) 2018/19 results

#238118

Postby londoninvestor » July 20th, 2019, 9:16 pm

longtermreturns wrote:Not only because it comes so soon after the recent fundraise...


Yes, and as shootingstar also alluded to above, anyone who bought in the last fundraise should consider complaining that this wasn't disclosed as a risk factor in the Securities Note. Was it really not foreseeable?

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Re: Albion Venture (AAVC) 2018/19 results

#238129

Postby FATKEN » July 20th, 2019, 11:08 pm

I agree with the view expressed by many contributors that the new performance incentive arrangement is tilted way too much in favour of the managers. Due to work commitment, I won't be able to attend the AGM on 21st August but I have already voted, by proxy, against the proposal. Hopefully, there are enought votes against the scheme from ordinary investors like us.

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Re: Albion Venture (AAVC) 2018/19 results

#238728

Postby shootingstar » July 23rd, 2019, 5:59 pm

In case of interest, below is an extract from the complaint letter I submitted to Sarah Fitton. She has responded to say has been passed on.

FATKEN I see we are in broad agreement on the proposal...if you have time I would suggest you also write in on similar grounds. The more people who raise formal objections, then the better chance the proposals don't go through in my view.
.......................................................
I have recently received by post various proposals relating to Albion Venture Capital Trust Plc including a planned change to the computation of Performance Fees on the VCT.
I am writing to indicate that based on my understanding of the changes, I do not support the proposals and will be voting against. I believe furthermore that should the planned changes be enacted, you are effectively treating investors like myself who recently invested unfairly (in my initial view breaching FCA “Treating Customers Fairly” guidelines). Therefore I wish to formally complain.
Among my main motivations for investing in Albion Venture Capital Trust Plc earlier in the year were 1) a high % of asset backed type investments in the portfolio currently which I felt over time might be realised 2) I felt performance fee aspects relating to the VCT were attractive relative to other VCTs. In particular with regard to point 2, the way I perceived it was that were the trust to experience a period of positive realisations (perhaps related to disposals of care homes and schools) my investment was positioned to fully benefit given that the trust had to make up a significant cumulative performance shortfall before any performance fee would be due.
I feel unfairly treated in that I do not recall any mention at all in marketing materials relating to the 2019 raise that a change in performance fees mechanism was being contemplated. I also specifically asked about whether my understanding of the performance fee situation was correct via email and received a response from Patrick Reeve.
As far as I understand them, the proposals constitute a significant shift of value to the investment manager and away from shareholders like myself in terms of the following
• It is proposed to reset the hurdle and remove the need for the trust to make up its cumulative shortfall
• It is proposed to more than double the performance fee, from 8% to 20%
• It is suggested to switch to an RPI+2% hurdle, which is currently a bit lower than the 5% existing hurdle
I believe furthermore that the increase in performance fees may damage the attractiveness of the VCT for investors and potentially over time contribute to a widening of discount to NAV and a destruction of shareholder value
I appreciate that it is also proposed to reduce the total expenses cap but perceive that this does not offset my above concerns on performance fees.
I believe that the changes being proposed should be reconsidered. Should changes be implemented to performance fees then they should perhaps relate to new investments. Any capital gains from the sale of the care homes and schools over existing values I think should accrue wholly to shareholders.

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Re: Albion Venture (AAVC) 2018/19 results

#238815

Postby FATKEN » July 24th, 2019, 7:33 am

Thank you, Shootingstar. I will write to Albion using the arguments advanced in your post.

onslow
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Re: Albion Venture (AAVC) 2018/19 results

#238822

Postby onslow » July 24th, 2019, 8:08 am

I've also emailed, specifically asking when this new performance fee arrangement was first discussed internally, and if prior to the close of the recent raising, why this wasnt declared then.

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Re: Albion Venture (AAVC) 2018/19 results

#238823

Postby barchid » July 24th, 2019, 8:17 am

Onslow/Shooting star
I sent an email a week ago as well, on a similar line, especially wrt the recent fund raise which I also participated in.
I haven't voted by proxy as I am planning on going to Farringdon for the AGM where I intend voting against.

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Re: Albion Venture (AAVC) 2018/19 results

#238894

Postby BusyBumbleBee » July 24th, 2019, 11:39 am

ShootingStar said, among other things
shootingstar wrote:Among my main motivations for investing in Albion Venture Capital Trust Plc earlier in the year were:

1) a high % of asset backed type investments in the portfolio currently which I felt over time might be realised

2) I felt performance fee aspects relating to the VCT were attractive relative to other VCTs. In particular with regard to point 2, the way I perceived it was that were the trust to experience a period of positive realisations (perhaps related to disposals of care homes and schools) my investment was positioned to fully benefit given that the trust had to make up a significant cumulative performance shortfall before any performance fee would be due.

The thing is this. I first invested in this VCT in 1996 and the assets you cherish are also cherished by me and I have very mixed feelings about new investors getting a share of what are incredibly valuable assets not bound by the new VCT rules. I would far prefer it if new money raised was put into a separate share class.

I am probably alone on this one as I think it is very important for the manager's fortunes to be closely aligned with that of the share holders and therefore in principal I am in favour of this - with a few small modifications. Hope to get to the AGM and meet more Fools in person.

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Re: Albion Venture (AAVC) 2018/19 results

#238909

Postby barchid » July 24th, 2019, 12:06 pm

BBB
I understand exactly where you are coming from in this, but if we had a new class of shares on each fund raise the expenses on each, rather tiny, trusts would be, if not prohibitive, pretty rich.
At least Albion tend to dilute quite little each year, and the new cash coming in is of course handy to pay out in dividends, tax free.
Will there be any way of fellow fools identifying each other at this AGM ?

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Re: Albion Venture (AAVC) 2018/19 results

#239139

Postby sinterklaas » July 25th, 2019, 10:43 am

barchid wrote:Will there be any way of fellow fools identifying each other at this AGM ?

Ask for a slice of lemon in your drink and look for others with same?

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Re: Albion Venture (AAVC) 2018/19 results

#239161

Postby UncleEbenezer » July 25th, 2019, 11:19 am

BusyBumbleBee wrote:At the same time as the results AAVC published a proposal for a New Performance Incentive for the manager. See https://www.albion.capital/sites/defaul ... 202019.pdf

Why didn't I see this in RNS?

It's not even an AGM resolution, it's a notionally-separate meeting, so when I looked up the AGM I saw no hint of it. Had it not been for this thread, I would never have noticed it, and surely the way they're slipping it under-the-radar must be designed to escape shareholders' attention. This is truly an exercise in stealth: a textbook example of attempted shareholder disenfranchisement.

That alone is enough to persuade me to vote No!

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Re: Albion Venture (AAVC) 2018/19 results

#239200

Postby barchid » July 25th, 2019, 1:09 pm

Sinterklaas
Sadly as the drinks normally come after the voting we can not use your witty response for ID purposes !

Uncle
I had certainly missed that point and it does make me feel, if not angry, most certainly more than a little niggled....

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Re: Albion Venture (AAVC) 2018/19 results

#239203

Postby timbo003 » July 25th, 2019, 1:21 pm

It's not even an AGM resolution, it's a notionally-separate meeting, so when I looked up the AGM I saw no hint of it. Had it not been for this thread, I would never have noticed it, and surely the way they're slipping it under-the-radar must be designed to escape shareholders' attention. This is truly an exercise in stealth: a textbook example of attempted shareholder disenfranchisement.

That alone is enough to persuade me to vote No!




Perhaps the Albion Directors and the Albion management should heed these wise words from the Sage of Omaha

"It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you'll do things differently."

https://www.forbes.com/sites/jamesberma ... o-live-by/

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Re: Albion Venture (AAVC) 2018/19 results

#239294

Postby BusyBumbleBee » July 25th, 2019, 5:17 pm

sinterklaas wrote:
barchid wrote:Will there be any way of fellow fools identifying each other at this AGM ?

Ask for a slice of lemon in your drink and look for others with same?

I simply hate lemon in my coffee! Or simply ask the chairman to ask for all Fools to identify themselves by standing up! I will if I can get there.

Does remind me of the old joke though as to why the elephant was sitting on a lemon outside the synagogue ;) the answer is on the old Fool by the way.

scotia
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Re: Albion Venture (AAVC) 2018/19 results

#239380

Postby scotia » July 25th, 2019, 10:21 pm

BusyBumbleBee wrote:
sinterklaas wrote:
barchid wrote:Will there be any way of fellow fools identifying each other at this AGM ?

Ask for a slice of lemon in your drink and look for others with same?

I simply hate lemon in my coffee!

But you must admit, it would make sure that everyone knew you were definitely a lemon fool :)

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Re: Albion Venture (AAVC) 2018/19 results

#239538

Postby barchid » July 26th, 2019, 6:04 pm

Scotia
Are you hoping to attend yourself?

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Re: Albion Venture (AAVC) 2018/19 results

#239753

Postby scotia » July 27th, 2019, 3:22 pm

barchid wrote:Scotia
Are you hoping to attend yourself?

No - I won't be there. I have a very poor attendance record at any VCT AGMs, chiefly due to the back-of-beyond places like London where most of them take place :)

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Re: Albion Venture (AAVC) 2018/19 results

#239916

Postby Gostevie » July 28th, 2019, 1:30 pm

Any fellow Fools planning on going to the Albion Enterprise VCT AGM at 12pm on Tuesday? I'm aiming to get to the nearby JD Wetherspoon 'Sir John Oldcastle' by about 10am for a bit of morning liquid refreshment before making my way there.

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Re: Albion Venture (AAVC) 2018/19 results

#240020

Postby barchid » July 29th, 2019, 6:14 am

Gostevie
Whereas a 10.00 Wetherspoons "livener" might have worked well for me some years ago I fear I will start with the 11.45 coffee , have to be sharp for the meeting !

I received an acknowledgement from Sarah Fitton 12 days ago for receipt of my email complaining about the proposals but no reply yet, have any other fools had a response rather than just an acknowledgement yet ?

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Re: Albion Venture (AAVC) 2018/19 results

#240236

Postby barchid » July 29th, 2019, 5:03 pm

Oddly enough this afternoon an email from Albion arrived, though not terribly promising imo.
Says things like "sorry to hear you have concerns they are duly noted", then goes on "board were advised by sponsor and believe proposals are in the best interests of both company & shareholders" etc etc
Essentially PR flannel, it was sent by Will Fraser-Allen and remarkably he described the stock as AVCT throughout !

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Re: Albion Venture (AAVC) 2018/19 results

#240274

Postby BusyBumbleBee » July 29th, 2019, 6:35 pm

barchid wrote:Oddly enough this afternoon an email from Albion arrived, though not terribly promising imo.
Says things like "sorry to hear you have concerns they are duly noted", then goes on "board were advised by sponsor and believe proposals are in the best interests of both company & shareholders" etc etc
Essentially PR flannel, it was sent by Will Fraser-Allen and remarkably he described the stock as AVCT throughout !

Hmmm... Did you expect the manager to reply or the directors? So a reply from the manager - quoting the Sponsor (Howard Kennedy) - seems the directors are just window dressing. I am extremely disappointed with this reply and will re-evaluate my whole view of Albion which up to this point has been very favourable. Certainly enough to make me vote against it.

"It takes 20 years to build a reputation and ONE LETTER to ruin it. " to paraphrase


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