Macquarie International Infrastructure Fund

[weijian]

On another note, a group of shareholders holding 10.27% of the shares has requisitioned a SGM to appoint 3 of their nominees as Directors of MIIF. No identity of the shareholders was given except that their shares are held under Raffles Nominee. I speculate that it could be the value funds who became substantial shareholders a year ago. Interestingly, MIIF has only 1 MIMAL director (the CEO) and 4 IDs. If the group of shareholders succeed in putting 3 of their directors inside - wouldn't they have control over MIIF ???

Please feel free to point out any mistakes / misconceptions on my part.

(Not Vested)

Hi Nick,
After reading up on a boardroom tussle at iCapital.biz recently, i am guessing that what is brewing up at MIIF, will be similar.

http://biz.thestar.com.my/news/story.asp...c=business


MIIF's mgt fees are 1.5% of 'market cap minus cash' (we can forget about the outperformance fee), and with each director (total 4) drawing USD 72.5k/annum for a mid-cap fund --> my opinion is that it is NOT cheap.

Let's see what can be done here:

(1) Default on Miaoli's debt. The default will not affect the NAV, as there is roughly a similar amount of intangible assets of Miaoli recorded on the books.

(2) Return existing cash hoard to shareholders. When Arqiva/MEIF/CAC was sold, it coincided with a prolonged period of low interest rates (thanks to Helicopter Ben). Asset values rose as a result of too much $ (from low interest rates and QE) chasing after too few deals. Mgt had acted quite prudently, deploying part of the cash to TBC, and waited for better deals while doing sharebuybacks. With liquidity expected to be plentiful and a dwindling cash position (<100mil sgd), the best way forward may just be returning the cash. With 59mil+25(receivables from TBC/CXP)-10(payables) = 75mil of cash or ~6cents/share.

(3) Finally, liquidate the 3 assets and close shop. At current prices of 56cents, without considering the cash, the market is roughly valuing TBC/CXP @0.9x P/B and HNE @0.8x P/B. (with so many problems at HNE, i am assuming it should command a lower valuation metric than TBC/CXP). It may not be a good comparison, but in GFC, Arqiva was sold at ~0.8x NAV.