Kazakh-focused firm heads for wind up

Tau Capital, a UK fund that invests in companies in Kazakhstan, has become the latest vehicle pressured by investors to begin winding itself up as the listed private equity sector continues to shrink.

Tau, which was backed by Lord Jacob Rothschild at its inception, has around $150m in assets under management, according to company statements. It has agreed to cease all investments and move into run-off mode, according to a report following the company’s annual general meeting last week.

Existing private equity investments are to be sold over a period of 12 to 24 months, and the public equities portfolio within six months. All proceeds are to be returned to shareholders.

Tau is the latest in a series of listed funds to enter run-off or be taken over in the last 18 months, as the sector continues to struggle with large disparities between net asset value and share price, and with a climate of poor liquidity.

The changes followed Tau’s AGM, and were instigated by Tau investor LIM Asia Multi-Strategy Fund, which is managed by investment firm LIM Advisers. In June, the asset manager had put forward ‘requisitioned’ resolutions for consideration at the AGM.

Neither Tau nor LIM Asia Multi-Strategy Fund could be contacted for comment in time for publication.

Terence Mahony, chairman of VinaCapital, and Nicolas Paris, the chief executive of corporate advisory firm Purbeck Advisers, have both been appointed as directors of the company. A new investment manager for the fund is set to be appointed within a month as part of the strategy change from actively investing to wind-up.

Around a third of Tau’s portfolio is held in private equity investments – including pharmaceutical distributor Stopharm – with the remainder held in public equities and cash, according to company statements.

Tau Capital was set up in 2007 with the aim of investing in listed and unlisted companies in Kazakhstan. The venture raised $251m on its floatation on the Alternative Investment Market in May 2007 – above its $200m target.

The firm was originally set up as a joint venture between Spencer House Capital Management – an investment fund run by former Fidelity and Schroders executive Richard Horlick and backed by Lord Rothschild – and Compass Asset Management, which is wholly owned by Kazakh asset manager Visor Holding.

The fund is now wholly managed by Compass, after Spencer sold its share in the business in January 2011, prior to its merger with the Credit Suisse owned investment fund JOHIM’s Waverton Global Equity Fund.

The wind up comes at a time when other listed private equity firms are also under pressure. In April, Swiss-listed Castle Private Equity announced it would adopt a realisation strategy and proposed replacing some members of its board, after the activist investors led by Abrams Capital sought to replace all of the fund’s directors.

Abrams was also involved in a takeover battle for Absolute Private Equity last summer. Abrams’ investment vehicle ACP attempted to acquire a stake capable of securing Absolute’s independence and continuing its realisation strategy. The attempt failed, and Harbourvest Partners bought the company in a deal worth about $800m. In July it also purchased Conversus Capital in a $1.4bn deal.

Article sourced from Financial News


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