By Sarah Thompson, Anthony Macdonald and Tim Boyd
Fund manager Geoff Wilson says he would manage the ASX-listed Contango Income Generator Ltd for 1 per cent a year, plus a 20 per cent performance fee above the S&P/ASX300 Accumulation Index.
According to a confidential proposal lobbed late last week, Wilson’s firm Wilson Asset Management would reshape the listed investment company’s strategy to focus on Australian companies with “compelling fundamentals, a robust macroeconomic thematic and a catalyst to drive the share price higher”.
Wilson told Contango Income Generator Ltd chairman Mark Kerr that he believed his proposal was superior to an alternative plan that see the listed investment company managed by WCM Investment Management Ltd and invest long/short in global equities.
He pointed to his firm’s 21-year track record and suite of listed investment companies, and, at a 1 per cent management fee and 20 per cent performance fee, it would be cheaper than the alternative plan.
Contango Income Generator Ltd and its investment manager Contango Funds Management announced the proposed strategy change to global equities last week, and would seek shareholder approval to execute the move on September 18.
The new strategy would see WCM and Contango split a 1.4 per cent management fee and 20 per cent performance fee for returns above the benchmark.
Wilson, whose funds owns about a 14.5 per cent stake in Contango Income Generator Ltd, gave notice of his intention to call a meeting to move the listed company’s chairman Kerr and director Don Clarke, and install himself and former media executive Glenn Burge.
Wilson was not happy with the company’s change of manager, strategy and equity raising at a discount to net tangible asset backing, as reported last week. Contango Income Generator Ltd said its decision came after an “extensive review” of the company, its investment strategy and alternative investmetn strategies.
Wilson’s notice of intention to remove and appoint directors was sent on Friday, and acknowledged by Contango Income Generator Ltd on Friday afternoon.
However, Contango Income Generator Ltd stopped short of acknowledging Wilson’s proposal for the investment management mandate sent on August 13.
Contango Income Generator Ltd had a $77.3 million investment portfolio as at the end of July, with stakes in Tabcorp, APA Group, Spark Infrastructure Group, Coles Group, Charter Hall Group and AusNet Services, among others.