TIDMAOF
RNS Number : 9522Z
Africa Opportunity Fund Limited
12 February 2014
For Immediate Release
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART
IN OR INTO AUSTRALIA, CANADA, SOUTH AFRICA OR JAPAN OR THE UNITED
STATES OF AMERICA OR TO US PERSONS.
This announcement is an advertisement and not a prospectus and
investors should not subscribe for or purchase any securities
except on the basis of information in the prospectus to be
published by the Company in due course in connection with the
admission of the existing ordinary shares and C shares to trading
on the Specialist Fund Market of the London Stock Exchange (the
"Prospectus"). Copies of the Prospectus will, following
publication, be available from the offices of Lawrence Graham
LLP.
12 February 2014
Africa Opportunity Fund Limited (the "Company")
Publication of Circular
The Board has today published a circular to convene an
Extraordinary General Meeting relating to, inter alia, the
continuation of the Company, the proposed issue of up to US$100
million of C Shares, and the Company's admission to the Specialist
Fund Market of the London Stock Exchange (the "Circular"). The
Circular will be posted to Shareholders and will be available made
on the Company's website (www.africaopportunityfund.com)
shortly.
1. Introduction
As previously announced, the Company is proposing to raise up to
US$100 million by way of a placing of C Shares at a placing price
of US$1.00 per C Share in conjunction with the admission to trading
of the Ordinary Shares being moved from AIM to the Specialist Fund
Market of the London Stock Exchange. Resolutions will be proposed
at the EGM to, inter alia, increase the authorised share capital of
the Company and adopt the New Memorandum and New Articles to
incorporate a new class of C Shares together with the rights
relating to such shares.
The Company does not have a fixed life but, as stated in the
Admission Document published in 2007, the Directors consider it
desirable that Shareholders should have the opportunity to review
the future of the Company at appropriate intervals. Accordingly,
the Board is also taking the opportunity to propose the
continuation of the Company for a further 5 years. Immediately
following the conclusion of the Extraordinary General Meeting,
certain changes to the constitution of the Board will,
conditionally on the passing of the Resolutions, also take effect
(as set out below).
The Company and the Investment Manager have also entered into
the Amended and Restated Investment Management Agreement which,
conditionally upon completion of the Placing, amends the management
fee payable to the Investment Manager. Further details of the
Amended and Restated Investment Management Agreement are set out
below.
It is currently anticipated that, subject to the Resolutions
being passed, a prospectus containing details of the Placing and
Admission will be published in early March 2014.
2. Investment rationale
The Directors and the Investment Manager consider that Africa
offers an attractive investment environment and the Placing will be
undertaken in order to raise further funds for the purpose of
achieving the investment objectives of the Company. The Company
targets industries rather than countries to exploit valuation
discrepancies which can arise among African countries. The
Directors and the Investment Manager believe also that Africa's
status as a continent containing a large number of reforming
countries provides investment opportunities in those countries.
According to the October 2013 issue of the 2014 World Economic
Outlook published by the International Monetary Fund, fourteen out
of the world's twenty fastest growing economies in 2014 are located
in Africa. As the economies of African countries develop and change
due to various factors, including rising annual GDP growth rates,
an emerging middle class and political reforms, opportunities to
invest emerge. By balancing the size and type of investment, the
Directors and the Investment Manager believe that attractive
returns may be made across asset classes. Whilst the African
capital markets can be volatile, by seeking diversity of investment
across industries and countries, it is believed that such risks can
be mitigated by the Investment Manager.
3. Terms of the Placing
The Company is proposing to raise up to US$100 million by way of
a placing of C Shares at a placing price of US$1.00 per C Share. C
Shares are a mechanism designed to overcome the potential
disadvantages for both existing Shareholders and new investors
which would arise out of a conventional fixed price mechanism where
further new Ordinary Shares would be issued for cash. In
particular:
-- the assets representing the net proceeds of the Placing will
be accounted for as a separate pool of assets until Conversion. By
accounting for the net proceeds of the Placing separately, existing
Shareholders will not be exposed to a portfolio containing
substantial amounts of un-invested cash nor the costs of investing
it;
-- the C Shares will not convert into Ordinary Shares until at
least 85 per cent. of the net proceeds of the Placing (or such
other percentage of the Directors and the Investment Manager shall
agree) have been invested in accordance with the Company's
investment policy (or, if earlier, six months after the date of
their issue); and
-- the NAV of the Ordinary Shares will not be diluted by the
expenses associated with the Placing which will be borne by the
subscribers for the C Shares.
The conversion ratio will be calculated such that the C Shares
in issue will convert into a number of Ordinary Shares calculated
by reference to the net assets then attributable to the C Shares
compared to the net assets at the same time attributable to the
Ordinary Shares then in issue (subject, at the discretion of the
Board, to a discount of up to 5 per cent.). The Board will only
exercise its discretion to attribute a discount to the net assets
attributable to the Ordinary Shares prior to the issue of the C
Shares and only if it believes such a discount is, in the context
of the Placing and Admission, in the best interests of the
Company.
Following Conversion, the investments which were attributable to
the C Shares will be merged with the Company's existing portfolio
of investments. The new Ordinary Shares arising on Conversion of
the C Shares will rank pari passu with the Ordinary Shares by
reference to a record date falling on or after the conversion of
the C Shares into Ordinary Shares.
This announcement does not constitute or form part of any offer
or invitation to purchase, otherwise acquire, subscribe for, sell,
otherwise dispose of, issue, purchase, otherwise acquire or
subscribe for, any security. This announcement does not constitute
a prospectus or prospectus equivalent document. Any decision to
acquire C Shares under the Placing must be made only on the basis
of the information contained in, and incorporated by reference
into, the prospectus of the Company to be published in due
course.
4. The Specialist Fund Market
Subject to the Resolutions being passed, it is the Board's
intention to make an application to the London Stock Exchange for
all of the existing issued Ordinary Shares to be admitted to
trading on the Specialist Fund Market and for the current admission
to AIM to be cancelled. In addition, subject to Shareholders
passing the Resolutions and the completion of the Placing, it is
the Board's intention to make an application to the London Stock
Exchange for all of the C Shares to be issued pursuant to the
Placing to also be admitted to trading on the Specialist Fund
Market. It is currently expected that Admission will become
effective and that dealings will commence before 31 March 2014.
The Board believes that moving the admission to trading of the
Ordinary Shares from AIM to the Specialist Fund Market will have
the following benefits for the Company and Shareholders:
-- the Placing: C Shares are not eligible for admission to AIM.
The Company will however be able to issue C Shares pursuant to the
Placing if the C Shares are admitted to trading on the Specialist
Fund Market;
-- liquidity: the issue of C Shares pursuant to the Placing in
conjunction with the Ordinary Shares being moved from AIM to the
Specialist Fund Market may increase liquidity in the Ordinary
Shares which may affect: (i) an investor's ability to realise some
or all of his investment; (ii) the price at which such investor can
effect such realisation; and/or (iii) the price at which the
Ordinary Shares trade in the secondary market; and
-- on-going annual costs: it is currently the expectation that
the Company's on-going annual costs per Ordinary Share would
decrease following Admission.
Admission of the Ordinary Shares to the Specialist Fund Market
does not require the approval of Shareholders and is not
conditional on the successful completion of the Placing.
Accordingly, should the Placing not complete, it remains the
intention of the Board to continue with the admission of the
Ordinary Shares to trading on the Specialist Fund Market.
5. Continuation of the Company
The Company does not have a fixed life but, as stated in the
Admission Document, the Directors consider it desirable that
Shareholders should have the opportunity to review the future of
the Company at appropriate intervals. Accordingly, the Board is
also taking the opportunity to propose, as an ordinary resolution,
that the Company continue in existence.
In addition to the investment rationale set out at paragraph 2
above, the Directors believe that Shareholders should vote in
favour of the continuation of the Company for the following
reasons:
-- the Company has performed strongly since inception;
-- despite the recent period of economic turmoil the Net Asset
Value has grown year-on-year since 2009 and, in aggregate, has
grown by 41.3 per cent. in the period since launch in 2007 to 31
December 2013;
-- US$ NAV total returns earned by the Company in each of the
years from 2008 to 2013 has been:
Year 2008 2009 2010 2011 2012 2013
US$ NAV
total
return
(%) -43.0 48.0 26.9 1.9 4.3 27.7
(audited save for the 2013 US$ NAV total returns which are
unaudited.)
-- the Board remains confident in the Company's ability to
generate capital growth and income through value arbitrage and
special situations investments in the continent of Africa.
If the continuation resolution is not passed at the EGM neither
the Placing nor the admission of the Ordinary Shares and/or the C
Shares to the Specialist Fund Market will proceed and the Directors
shall formulate proposals to be put to Shareholders to reorganise
or reconstruct the Company or to wind up the Company. If the
continuation resolution is passed at the EGM but the Placing does
not complete, the C Shares will not be issued but it remains the
intention of the Board to continue with the admission of the
Ordinary Shares to trading on the Specialist Fund Market.
If the continuation resolution is passed at the EGM, the Company
will continue its operations as contemplated in the Circular and a
continuation resolution will be put to Shareholders at an
extraordinary general meeting in 2019 and every five years
thereafter. At the same time as the continuation vote in 2019, the
Company will provide Shareholders with an opportunity to realise
all or part of their shareholding in the Company. This realisation
opportunity would be conditional on completion of the Placing.
6. Corporate governance changes
The Board has undertaken a comprehensive analysis of the
Company's corporate governance structure in the light of
developments in international standards and practices since the
Company was established in 2007. The review of the Company's
corporate governance has led to the New Articles including the
following corporate governance changes:
-- an annual general meeting to be held each year to receive and
adopt the Company's financial statements. The annual general
meeting will be held within six months of the end of each financial
year and the first such annual general meeting will be held before
30 June 2015;
-- each Director, except any non-independent Director, will in
future offer himself or herself for re-election at the annual
general meeting on a rotating basis whereby each Director will seek
re-election at least every three years, commencing at the 2015
annual general meeting;
-- a non-independent Director will in future offer himself for
re-election annually at the annual general meeting, commencing at
the 2015 annual general meeting with Mr Knapp who is not
independent by virtue of his position as a principal of the
Investment Manager;
-- the appointment of new Directors will be subject to
re-election at the next following annual general meeting after
their appointment; and
-- the threshold at which Shareholders can require that the
Board convene an extraordinary general meeting shall be reduced
from 25 per cent. to 10 per cent. of the Shares.
In addition to the above corporate governance changes to the
Articles, it is proposed that the composition of the Board will
change. It is intended that: (i) Messrs Daniels and Gradel will
resign as Directors; and (ii) Mr Knapp will resign as Chair, to be
succeeded by Mrs Belo-Osagie. These changes to the Board will,
conditionally on the passing of the Resolutions, become effective
immediately following the conclusion of the Extraordinary General
Meeting. The foregoing changes are conditional on the passing of
the Resolutions but are not conditional upon the completion of the
Placing or Admission.
In addition, Mr. Vikram Mansharamani and Mr. Peter Mombaur will
be appointed, conditional upon admission of the Ordinary Shares to
the Specialist Fund Market, as new non-executive Directors.
Vikram Mansharamani, non-executive director (aged 40)
Dr. Mansharamani is a lecturer at Yale University, where he
teaches classes on business ethics and financial markets and a
Senior Fellow at the Mossavar-Rahmani Center For Business &
Government at the Harvard Kennedy School. Previously, Dr.
Mansharamani was a managing director at SDK Capital LLC and also
held positions at Great Hill Equity Partners, Merrill Lynch &
Co. and Booz Allen & Hamilton. Dr. Mansharamani is currently
the President of Kelan Advisers LLC and Chairman of the Board of
Directors of the Torit School, Inc. Dr. Mansharamani holds a PhD
from the MIT Sloan School of Management, a MSc in security studies
from the Massachusetts Institute of Technology and a BA degree in
Ethics, Politics and Economics from Yale University.
Peter Benedikt Mombaur, non-executive director (aged 46)
Mr. Mombaur is co-Managing Director of Tana Africa, an
African-focused investment company which aims to create long-term
value by investing into fast-moving consumer goods, agriculture,
retail and education in the African region. Mr. Mombaur's career
began when he joined Germany utility company RWE Group in 1995
before moving to McKinsey & Company in 1998 to work on business
development projects in both Europe and Africa. Mr. Mombaur has
diplomas in Economics and Mechanical Engineering from Universitaet
Bayreuth and RWTH Aechen respectively and a degree in Law from
Fern-Universitaet Hagen. Mr. Mombaur is co-founder of the African
Leadership Academy, Johannesburg and co-founder and chairman of
Terra Education.
7. Amended and Restated Investment Management Agreement
The Company and the Investment Manager have entered into the
Amended and Restated Investment Management Agreement which,
conditionally upon completion of the Placing, amends the management
fee payable to the Investment Manager. The opportunity has also
been taken to make certain non-material consequential amendments to
the Amended and Restated Investment Management Agreement which will
take effect on admission of the Ordinary Shares to the Specialist
Fund Market. Under the Amended and Restated Investment Management
Agreement, conditionally upon completion of the Placing, the
Investment Manager will receive a management fee equal to the
aggregate of: (i) two per cent. of the Net Asset Value per annum up
to US$50 million; and (ii) one per cent. of the Net Asset Value per
annum in excess of US$50 million, payable in US$ quarterly in
advance. The annual carried interest payable to the Investment
Manager's management team will continue unchanged.
8. Extraordinary General Meeting
The Resolutions will be proposed at the EGM to be held at Rond
Point Robert Schuman 9, B-1040, Brussels, Belgium at 11.00
(Greenwich Mean Time)/12.00 noon (Central European Time) on 28
February 2014. At the EGM three resolutions will be proposed:
Resolution 1 will be proposed as a ordinary resolution. If the
resolution is passed, the Company will continue its operations as
contemplated in the Circular and a similar resolution will be put
to Shareholders at an extraordinary general meeting in 2019 and
every five years thereafter.
Resolutions 2 and 3 will be proposed as an ordinary and special
resolution respectively and are conditional upon Resolution 1 being
passed at the EGM. If Resolution 2 is passed at the EGM, the
Company's authorised share capital will be increased to allow for
the issue and conversion of the C Shares. If Resolution 3 is passed
at the EGM, the New Memorandum and New Articles will be adopted to
incorporate new C Share rights and certain corporate governance
changes.
A copy of the New Memorandum and New Articles with the proposed
amendments will shortly be available on the Company's website:
www.africaopportunityfund.com and at the offices of Lawrence Graham
LLP, 4 More London Riverside, London SE1 2AU during normal business
hours on any weekday (Saturdays, Sundays and public holidays
excepted) from the date of the Circular until the end of the
Extraordinary General Meeting and at the meeting venue itself for
at least 15 minutes prior to the Extraordinary General Meeting
until the end of the Extraordinary General Meeting.
9. Recommendation
The Board unanimously recommends that Shareholders vote in
favour of the Resolutions to be passed at the Extraordinary General
Meeting. The Directors intend to vote in favour of the Resolutions
in respect of their holdings of Ordinary Shares amounting to
approximately 10.8 million Ordinary Shares in aggregate
(representing approximately 25.5 per cent. of the issued share
capital of the Company as at 11 February 2014 (being the latest
practicable date prior to the publication of the Circular)). The
Board has also received indications from other Shareholders holding
approximately 16.2 million Ordinary Shares in aggregate
(representing approximately 38.2 per cent. of the issued share
capital of the Company as at 11 February 2014 (being the latest
practicable date prior to the publication of the Circular)) that
they intend to vote in favour of the Resolutions.
Shareholders should note that, notwithstanding the passing of
the Resolutions, there can be no guarantee that the Placing and
Admission will take place.
Defined terms used in this announcement shall have the meanings
ascribed to them in the 'Definitions' section below.
EXPECTED TIMETABLE
Latest time and date for receipt 11.00 a.m. (Greenwich Mean
of Forms of Proxy Time)/12.00 noon (Central
European Time) on 26 February
2014
----------------------------------------- -----------------------------------
Record date for Extraordinary General 5.00 p.m. (Greenwich Mean
Meeting Time)/6.00 p.m. (Central European
Time) on 26 February 2014
----------------------------------------- -----------------------------------
Time and date of Extraordinary 11.00 a.m. (Greenwich Mean
General Meeting Time)/12.00 noon (Central
European Time) on 28 February
2014
----------------------------------------- -----------------------------------
Announcement of results of Extraordinary 28 February 2014
General Meeting
----------------------------------------- -----------------------------------
Admission and dealings in the Ordinary 31 March 2014
Shares and the C Shares commence
on the Specialist Fund Market expected
to be before
----------------------------------------- -----------------------------------
The times and dates set out in the expected timetable and
mentioned throughout this announcement may, in certain
circumstances, be adjusted by the Company, in which event details
of the new times and dates will be notified, as required, to the
UKLA and the London Stock Exchange and, where appropriate,
Shareholders and a further announcement will be made through a
Regulatory Information Service.
All references to times in this announcement are to Greenwich
Mean Time unless otherwise stated.
CONTACT DETAILS
Africa Opportunity Fund Limited
Francis Daniels Tel: +27 11 684 1528
Edmond de Rothschild Securities (UK) Limited, Broker &
Financial
Adviser
Andrew Davies (Sales) Tel: +44 (0)20 7845 5960
William Marle Tel: +44 (0)20 7845 5950
Hiroshi Funaki Tel: +44 (0)20 7845 5960
funds@lcfr.co.uk
Grant Thornton UK LLP, Nominated Adviser
Philip Secrett Tel: +44 (0)20 7383 5100
David Hignell Tel: +44 (0)20 7383 5100
philip.j.secrett@uk.gt.com
DEFINITIONS
"Admission" admission of the Ordinary Shares and/or the
C Shares to be issued pursuant to the Placing
to trading on the Specialist Fund Market (as
appropriate)
"Admission Document" the AIM admission document of the Company dated
18 July 2007
"AIM" the AIM market of the London Stock Exchange
"Amended and Restated the amended and restated investment management
Investment Management agreement dated 12 February 2014 between the
Agreement" Investment Manager, the Company and Africa
Opportunity Fund (GP) Limited (in its capacity
as the general partner of Africa Opportunity
Fund LP), as more particularly described in
paragraph 7 of this announcement
"Articles" the existing articles of association of the
Company
"Board" or "Directors" the board of directors of the Company
"Clearstream" the system of paperless settlement of trades
and the holdings of shares without share certificates
administered by Clearstream Banking S.A.
"C Shares" C shares of US$0.10 each in the capital of
the Company which will convert into Ordinary
Shares on Conversion
"Company" Africa Opportunity Fund Limited
"Conversion" the conversion of C Shares into new Ordinary
Shares in accordance with the terms set out
in the New Articles
"Euroclear" the system of paperless settlement of trades
and the holding of shares without share certificates
administered by Euroclear Bank SA
"Extraordinary General the extraordinary general meeting of the Company
Meeting" or "EGM" convened for 11.00 a.m. (Greenwich Mean Time)/12.00
noon. (Central European Time) on 28 February
2014 at Rond Point Robert Schuman 9, B-1040,
Brussels, Belgium
"Form of Proxy" the proxy form for use in connection with the
EGM, and which accompanies the Circular
"Investment Manager" Africa Opportunity Partners Limited
"NAV" net asset value
"New Articles" the amended and restated articles of association
of the Company to be adopted at the EGM
"New Memorandum " the amended and restated memorandum of association
of the Company to be adopted at the EGM
"Ordinary Shares" ordinary shares of US$0.01 each in the capital
of the Company
"Placing" the proposed placing of up to 100 million C
Shares at US$1.00 per share described in this
announcement
"Resolutions" resolutions 1 to 3 to be proposed at the EGM
"Shareholder" a holder of Ordinary Shares and "Shareholders"
shall be construed accordingly
"Specialist Fund the Specialist Fund Market of the London Stock
Market" Exchange
"US$" US dollars
This announcement has been prepared by the Company for
information purposes only and does not constitute an offer to sell,
or the solicitation of an offer to acquire or subscribe for, the C
Shares in any jurisdiction. Any offer and/or sale of C Shares will
not be registered under the applicable securities laws of the
United States, Australia, Canada, South Africa or Japan. Subject to
certain exceptions, the C Shares may not be offered or sold within
the United States, Australia, Canada, South Africa or Japan or to
any national, resident or citizen of the United States, Australia,
Canada, South Africa or Japan. This announcement does not
constitute any form of financial opinion or recommendation on the
part of the Company or any of its affiliates or advisers and is not
intended to be an offer, or the solicitation of any offer, to buy
or sell any securities in any jurisdiction.
Neither the U.S. Securities and Exchange Commission (the "SEC")
nor any state securities commission has approved or disapproved of
the securities referred to in this announcement or passed upon the
adequacy or accuracy of this announcement. Any representation to
the contrary is a criminal offence in the United States.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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