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Opalesque Industry Update - The leading UK activist fund manager, Martin Hughes, has announced that Tosca Opportunity (and sister fund, Tosca Mid Cap) will accept no further inflows after 2 June 2014. In his explanatory newsletter, issued on 7 May 2014, the PM makes it clear that the expected future performance of the Fund’s net asset value per share takes priority over the size of the funds managed. This is a clear demonstration of the commitment to alignment of interests and has been warmly received by existing investors. The PM adopts a private equity style investment time horizon, and target returns, in publicly listed equities. As such, the PM anticipates that the core holdings, many of which are already held for at least 4 years, will take up to a further 2 years to reach fair valuations and/or exits. It is therefore envisaged that the Funds will remain closed to inflows for at least 2 years. Key comments from the April month end newsletter include:- “In being by far the largest shareholder, the PM is unashamedly protecting his own interests in setting out to maximise the upward movement of the net asset value, rather than allow asset gathering to dilute the returns of current investments, some of which now approach the reasonable investment limit. I hope the shareholders agree that this is an unequivocally positive situation for all shareholders. The PM has prioritised the capital allocation in the Fund to higher certainty, higher return holdings (target IRRs of >30%). Some of these are now at a point of limited marginal ability to invest new funds (e.g. up to 28% of equity ownership). In some cases, we have moved to these ownership levels by way of supporting the new equity issuance. Known inflows and capacity agreed puts the Fund in a comfortably invested position. As such, stemming the inflows beyond known commitments after 2nd June would be in the interests of all current shareholders.” Martin Hughes, CEO of Toscafund, commented, “I understand that closing a well performing, multi-award winning fund to inflows may not be common practice in an industry where AUM is often an objective that is set ahead of performance. My personal objective is for the future annualised returns to continue to outperform and at least match the past. Since inception in 2005, Tosca Opportunity has delivered an annualised return of 14.4% net which compares with just 4% of the MSCI World Index. I look forward to working with the management and directors of our holdings to set out the best path to a fair equity valuation for each position.” Toscafund is a leading Alternative Asset Manager based in London. It was founded in 2000 by Martin Hughes, previously Chairman of Tiger Management Europe Limited. Toscafund manages equity funds specialising in global financials and UK mid cap activism. In addition, Toscafund has a proven track record of bringing opportunistic funds to its clients to take advantage of specific opportunities as they arise, including UK mortgages (Tosca MOD) and, most recently, UK commercial property (Tosca UK Commercial Property). Toscafund currently manages c. $3bn and employs 33 people. press release Bg |
Industry Updates
Tosca Opportunity fund annualises 14.4% since 2005, closes to new inflows
Friday, May 09, 2014
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