TIDMVNF
RNS Number : 0781Y
PXP Vietnam Fund Limited
26 November 2014
PXP Vietnam Fund Limited ("PXPVF")
26 November 2014
PROPOSED MERGER WITH PXP VIETNAM EMERGING EQUITY FUND
LIMITED
PXP Vietnam Fund Limited is today despatching to its
shareholders a circular containing details of its proposed merger
with PXP Vietnam Emerging Equity Fund Limited ("VEEF") and
convening an extraordinary general meeting of shareholders at which
a resolution will be proposed to enable the Merger to be put into
effect ("Circular").
INTRODUCTION
The Investment Manager of PXPVF, PXP Vietnam Asset Management
Limited, has submitted a proposal to the Board of Directors of
PXPVF (the "Board") that PXPVF merge with PXP Vietnam Emerging
Equity Fund Limited ("VEEF"), a Cayman Islands open-ended mutual
fund which is also managed by the Investment Manager (the
"Merger").
The rationale for the proposal is that the shareholders of both
constituent entities would benefit from being members of an
enlarged fund with the combination of similarly focused investment
portfolios, savings from economies of scale and a reduction in
concentration risk for shareholders. As the surviving entity in the
proposed Merger, VEEF, is an open-ended fund with a monthly
subscription and redemption cycle, the Shareholders of PXPVF would
benefit after the merger from having the opportunity to subscribe
for new shares or redeem their shares at Net Asset Value (less a
redemption fee) on a monthly basis.
The consent of Shareholders is required to approve the Merger.
The consent of Shareholders is further required under the Listing
Rules to cancel the listing of the PXPVF shares on the premium
segment of the Official List of the United Kingdom Listing
Authority ("UKLA") once the Merger has been implemented.
Shareholders are invited to vote on the Merger proposal, with
Shareholders' consent by the passing of a special resolution in a
general meeting being required to approve the Merger.
If the Merger proposals are approved, it is intended that PXPVF
will apply to the UKLA for the cancellation of the listing of its
shares on the Official List of the UKLA.
INFORMATION CONCERNING PXP VIETNAM EMERGING EQUITY FUND
LIMITED
VEEF is an open-ended mutual fund which is regulated by CIMA,
the Cayman Islands Monetary Authority.
VEEF currently has similar investment policies, objectives and
restrictions as those for PXPVF, with the main differences being
that VEEF invests in the equity securities of listed companies
which either have a capitalisation or net asset value in excess of
US$20 million at the time of investment (PXPVF: US$5 million); VEEF
will not invest more than 20% of its assets at the time of
investment in a single issuer (PXPVF: 10% of its Net Asset Value);
and VEEF restricts its investments in unlisted companies to no more
than 10% of its assets at the time of investment (PXPVF: 30% of its
Net Asset Value). The Merger would have the effect of imposing
VEEF's current investment policies, objectives and restrictions on
former PXPVF Shareholders once the merger is complete.
The portfolios of both PXPVF and VEEF are managed by the
Investment Manager and are currently managed by the same
individual, Kevin Snowball, and thus shareholders in the new merged
entity would also benefit from centralised portfolio
construction.
Participating shares in VEEF may be redeemed at Net Asset Value
(less a redemption fee of 3% in the first 12 months after
subscription and 1% thereafter) on a monthly basis. The first date
for redemption by former PXPVF Shareholders would be 1 April 2015
(assuming the passing of the relevant resolution at the
Extraordinary General Meeting to be held on 17 December 2014).
Redemption fees are for the benefit of the Fund.
Participating shares in VEEF are non-voting, except on matters
that would materially affect or prejudice the rights attached to
the shares as specified in the Articles of Association of VEEF.
The current board of directors of VEEF comprises three
non-executive directors: Christopher Vale (also a Director of
PXPVF), Antony Jordan (also a Director of PXPVF) and Henry "Brook"
Tellwright.
The registered office of VEEF up to 31 December 2014 is:
CARD Corporate Services Ltd.
Zephyr House
122 Mary Street
Grand Cayman KY1-1107
Cayman Islands
With effect from 1 January 2015, the registered office of VEEF
will move to:
Harneys Services (Cayman) Limited
4(th) Floor, Harbour Place
103 South Church Street
Grand Cayman KY1-1002
Cayman Islands
PXP Vietnam Emerging Equity Fund - Net Asset Value and Portfolio
of Assets
As at 31 October 2014, VEEF had an unaudited Net Asset Value of
US$40,304,787. With 5,952,473.491 participating shares in issue,
this gives an average Net Asset Value per Share of US$6.771.
The balance sheet of VEEF as at 31 October 2014 comprises:
-- 28 listed Vietnamese companies - total unaudited fair value of US$40,264,778
-- Three unlisted Vietnamese companies - total unaudited fair value of US$551,521
-- One Singapore listed company - unaudited fair value of US$76,247
-- Cash (unaudited) - US$12,672
-- Other net liabilities (unaudited) - US$600,431
The portfolio of VEEF is diversified and is invested across a
range of industries, as shown below:
Unaudited
Number of Fair Value
assets as
at as at % of
31 October 31 October
Sector 2014 2014 total assets
US$ %
Consumer Staples 2 7,731,195 18.9
Energy 2 3,200,075 7.8
Financials 6 10,527,291 25.7
Healthcare 2 638,787 1.6
Industrials 5 3,983,368 9.7
Information Technology 2 3,505,207 8.6
Materials 7 7,255,958 17.7
Property 4 3,418,489 8.4
Utilities 1 632,175 1.6
Telecommunication
Services 1 1 0.0
Total 32 40,892,546 100.0
Source: PXP Vietnam Asset Management Limited (Investment Manager
of VEEF)
The portfolio of VEEF includes some of the most sought after
blue-chip stocks in Vietnam, such as Vinamilk, Hoa Phat Group and
FPT Corporation. The ten largest holdings as at 31 October 2014
were:
% of Net
Assets
(unaudited)
%
Vietnam Dairy Products JSC (Vinamilk)
(VNM) 16.8
Hoa Phat Group JSC (HPG) 12.7
Ho Chi Minh City Securities JSC (HCM) 11.9
FPT Corporation (FPT) 8.5
Petrovietnam Drilling and Well Services
JSC (PVD) 7.8
Sai Gon Thuong Tin Commercial JSC (Sacombank)
(STB) 7.0
Hoang Anh Gia Lai JSC (HAG) 4.9
Da Nang Rubber JSC (DRC) 3.7
Dong Phu Rubber JSC (DPR) 3.5
Military Commercial Joint Stock Bank
(MBB) 2.8
Source: PXP Vietnam Asset Management Limited (Investment Manager
of VEEF)
PXP Vietnam Emerging Equity Fund - Series of Shares
To ensure the equitable allocation of performance fee (if
applicable) between shares, VEEF issues a new series of shares each
time there is a subscription. The subscription price of new shares
issued on the first dealing day of a financial year will be the NAV
per Share of the VEEF Lead Series shares after deduction of
crystallised performance fee, if any, on the valuation day relating
to such dealing day. The subscription price of new shares issued on
any other dealing day (usually the first business day of every
month) during the year will be the NAV per Share of the VEEF Lead
Series shares before deduction of accrued performance fee, if any,
on the valuation day relating to such dealing day.
Shares in each series of shares, including the Lead Series, have
the same rights as the shares in any other series. Each series may
have a different Benchmark and different High Water Mark from other
series in issue at any given time. See Appendix I of the Circular
for definitions of the Benchmark, High Water Mark and a worked
example of the performance fee calculation.
DETAILS OF THE PROPOSED MERGER
The surviving entity in the Merger would be VEEF. The Merger
would be made on the basis of the respective NAV and NAV per Share
of each of PXPVF and VEEF (Lead Series).
Pursuant to the Merger, Shareholders in PXPVF will have their
PXPVF shares cancelled in return for the issue of new participating
shares in VEEF on an NAV basis so as to ensure that the total NAV
of the VEEF shares held by each ex-PXPVF Shareholder post-Merger
will be equal to that of the PXPVF shares held by each such
Shareholder prior to the Merger (subject only to rounding
differences). The respective NAV and NAV per Share of each of PXPVF
and VEEF for this purpose will be calculated on the valuation
date.
The share exchange ratio will be rounded to six decimal places.
Entitlements to VEEF shares will be rounded to three decimal
places.
The valuation date for the purpose of the Merger will be 31
December 2014. The NAVs of both VEEF and PXPVF will be finalised as
soon as possible thereafter, and it is expected that final figures
for both funds will be available on 9 January 2015.
The Merger is expected to become effective, following
shareholder approval, on 2 February 2015.
For holders of Depository Interests, if the merger is approved,
any Depository Interests will automatically be withdrawn from CREST
prior to the effective date.
Registered shareholders of PXPVF, including holders of
Depository Interests, will be informed of their holdings in VEEF
(effective 2 February 2015) by the issue of contract notes on or
around 9 February 2015.
VEEF shares are issued in registered form and no share
certificates are issued. Ownership of VEEF shares will be recorded
in the share register maintained by the Fund Administrator of
VEEF.
All PXPVF shares shall be cancelled by operation of the Merger
and any certificates or other documents of title in respect of
PXPVF shares will be invalid and treated as cancelled.
A draft Plan of Merger is enclosed at Part 2 of the Circular
(the "Plan of Merger") and includes a worked example of the Merger
mechanism.
Calculation of NAV
The Fund Administrator for both PXPVF and VEEF is HSBC Trustee
(Cayman) Limited, with HSBC Institutional Trust Services (Asia)
Limited acting as the Administrator's delegate. The Administrator
calculates the NAV per Share for both PXPVF and VEEF on a monthly
basis in accordance with their respective valuation policies. As
confirmed by the Boards of each fund, the valuations of investments
made under the valuation policies of both PXPVF and VEEF are
consistent with International Financial Reporting Standards.
Summaries of the valuation policies of PXPVF and VEEF are set out
in Appendix II of the Circular.
The NAV per Share for each of PXPVF and VEEF (Lead Series) used
for calculating the merger share exchange ratio will be such
unadjusted NAV per Share for each of PXPVF and VEEF (Lead Series)
as calculated by the Administrator as at the valuation date.
Management Fee and Performance Fee
Effective from 1 January 2015, the monthly management fee
payable to the Investment Manager by VEEF will reduce to
one-twelfth of 1.5% of the Net Asset Value (currently one-twelfth
of 2% of the Net Asset Value) and the performance fee rate will be
reduced to 15% over an 8% hurdle with a high water mark (currently
20% over an 8% hurdle with a high water mark).
If the merger is implemented, the initial Benchmark and High
Water Mark applicable to the VEEF shares to be issued to former
shareholders of PXPVF will be the effective subscription price,
which is the NAV per Share of VEEF Lead Series shares (before
deduction of performance fee, if any) on the valuation day relating
to the dealing day on which the shares are issued. The hurdle rate
of 8% per annum will be applied to this subscription price. See
Appendix I of the Circular for definitions of the Benchmark, High
Water Mark and a worked example of the performance fee
calculation.
THE INVESTMENT MANAGER'S RATIONALE FOR MAKING THE PROPOSAL
PXP Vietnam Asset Management Limited ("PXP"), the Investment
Manager of PXPVF and VEEF, has suggested to the Board of Directors
of both funds that a proposal be put to shareholders for them to
consider a merger of the two funds into a single vehicle with the
open-ended structure of VEEF the surviving entity.
PXP has made the recommendation as it feels that a merger would
confer significant benefits on the shareholders of both funds, as
outlined below.
In general, PXP is of the view that the single country
closed-end fund model is no longer functioning effectively as far
as Vietnam is concerned. There has been no new issuance for a
number of years and wide discounts persist. PXP believes that the
main reason for any narrowing of discounts in Vietnam-focused
closed-end funds in general in a now three year bull market has
been through share buy-backs, and that such share buy-backs have
not made substantial or enduring differences to the discounts. This
suggests either a lack of interest in the Vietnamese market (which
the increase in ETF assets under management over the past two years
would refute) or some apathy toward the closed-end structure
itself.
PXP believes that under current and reasonably foreseeable
market conditions, and without the influence of open-ending
opportunities it is unlikely that the discount at which PXPVF
shares trade to PXPVF's Net Asset Value would be eliminated in the
context of a closed-end fund and that therefore PXPVF Shareholders
would benefit from a move to an open-ended structure.
BENEFITS OF THE PROPOSED MERGER (IF IMPLEMENTED)
-- PXPVF Shareholders would be moving from a closed-end to an
open-ended structure, effective from 2 February 2015. They would
have the ability to redeem shares at Net Asset Value less a
redemption fee, a minimum of eleven months ahead of schedule (PXPVF
Shareholders can vote on open-ending from the 2015 AGM
onwards).
-- The Merger would create a fund of sufficient size for the
shareholders of both constituent entities to enjoy economies of
scale. The largest costs of PXPVF are based on NAV - such as
management fee, administration fee and custodian fee. The
management fee in VEEF will be 1.5% per annum compared to 2% per
annum in PXPVF. There will be some economies of scale and savings
in fixed costs per share, including directors' fees, auditor's fees
and fixed elements of the administration fees and custodian fees.
It has been estimated that expenses will reduce from US$0.164 per
share per annum to US$0.120 per share per annum after the merger
(based on 31 October 2014 NAV and adjusted for the merger share
exchange ratio). However, PXPVF Shareholders would be moving from a
fund with no performance fee to a fund which charges a performance
fee at a rate of 15% over an 8% hurdle with a high water mark.
-- It is reasonable to expect that the discount at which shares
trade to the Net Asset Value will continue to narrow from the 13%
level at which the shares of PXPVF were trading before the
preliminary announcement on 18 September 2014 to a level equivalent
to Net Asset Value less a redemption fee at the time the funds are
merged (assuming that the proposals are approved by PXPVF
Shareholders).
-- The proposed Merger would grant Shareholders the ability to
exit their investment at a time of their choosing in accordance
with the monthly redemption terms of VEEF, rather than being
subject to the vagaries of the market if, for example, the market
suffers a liquidity squeeze such as that which happened in
2008.
-- The benefits of being invested in a larger fund will be
attained without losing focus on the investment objective of PXPVF,
through the combination of the portfolio of PXPVF with a portfolio
of similarly focused holdings (both portfolios being over 50%
exposed to Vietnam-listed stocks at their respective foreign
ownership limits).
RISKS ARISING FROM THE PROPOSED MERGER
-- The move by PXPVF Shareholders to an open-ended structure
presents a risk of substantial withdrawals by shareholders within a
short period of time which could require the post-Merger VEEF to
liquidate investments more rapidly than would otherwise be
desirable, possibly reducing the value of assets and/or disrupting
the investment strategy.
-- VEEF is currently a Cayman Islands mutual fund and its shares
are not listed on any stock exchange. The board of directors of
VEEF seeks to comply with the principles and standards set out in
The Cayman Islands Monetary Authority Statement of Guidance -
Corporate Governance for Regulated Funds. However, VEEF is not
subject to the UK Corporate Governance Code and its directors are
not required to report to shareholders on the extent to which the
fund has complied with a code of corporate governance.
-- As the shares of VEEF are not listed on a stock exchange,
VEEF is not subject to the Listing and Disclosure and Transparency
Rules published by the UK Listing Authority, or any equivalent or
similar listing and disclosure and transparency rules. The
protections to shareholders which arise from such rules may not be
present for shareholders in VEEF. For example, VEEF is not subject
to any rules that require major shareholders to disclose their
interests in the shares of the company or to rules that require
directors and persons discharging managerial responsibilities to
disclose their dealings in shares of the company.
-- Participating shares in VEEF are non-voting, except on
matters that would materially affect or prejudice the rights
attached to the shares as specified in the Articles of Association
of VEEF. PXPVF Shareholders will no longer have the right to vote
on matters affecting the direction and management of the fund in
which they are invested.
COSTS OF THE PROPOSED MERGER
The total legal and professional costs to be incurred on the
proposed Merger are estimated to be no more than US$90,000. The
Boards of PXPVF and VEEF have agreed that the legal and
professional costs will be allocated to the two funds pro-rata to
their respective Net Asset Values.
In addition, the transfer of assets from PXPVF to VEEF in
Vietnam will incur: (i) central depository transaction charges at
0.1% of the value of the assets transferred, payable by the
transferor, and 0.1% of the value of the assets transferred,
payable by the transferee, and (ii) taxation at 0.1% of the value
of the assets transferred, payable by the transferor. It should be
noted, however, that these costs are similar to those that would be
incurred if VEEF were to receive a large subscription and invest
the proceeds into the market, but without the market impact risk of
such an infusion.
CONSENTS REQUIRED FOR THE MERGER
The requirements of the Merger are governed by The Companies Law
(2013 Revision) of the Cayman Islands. Pursuant to Section 233(6)
thereof, a plan of merger shall be authorised by each constituent
company by way of:
(a) a special resolution of the members of each such constituent company; and
(b) such other authorisation, if any, as may be specified in
such constituent company's articles of association.
For the purpose of the Merger, each of PXPVF and VEEF is a
"constituent company", with VEEF being the surviving entity.
The Articles of Association of PXPVF specify that the requisite
majority for a special resolution shall be not less than 75% of
votes cast by members at a general meeting.
The Articles of Association of VEEF specify that participating
shares in VEEF are non-voting, except on matters that would
materially affect or prejudice the rights attached to the shares.
The directors of VEEF and holders of the management shares, being
PXP Vietnam Asset Management Limited, will take all necessary steps
to authorise the Merger on behalf of VEEF, subject to the approval
of PXPVF Shareholders at the proposed Extraordinary General Meeting
("EGM").
Dissenting shareholders
If a special resolution to approve the Merger is passed by the
requisite majority of the Shareholders of PXPVF and the Plan of
Merger is approved by the Cayman Islands Registrar of Companies,
any dissenting PXPVF shareholders will still receive new shares in
VEEF in exchange for their shares in PXPVF.
SHAREHOLDERS WISHING TO REDEEM THEIR SHARES
The shares of PXPVF will continue to be traded on the London
Stock Exchange's Main Market for listed securities until 30 January
2015.
After the Merger, it will be possible for any former PXPVF
Shareholders to redeem their VEEF shares at NAV minus a 3%
redemption fee as of 1 April 2015 provided that notice is given by
10 February 2015. The next available redemption dealing day is 4
May 2015, with notice required by 10 March 2015.
The 3% redemption fee is less than the average discount to NAV
at which the shares of PXPVF have traded over the 12 months prior
to the initial announcement of Merger proposals on 18 September
2014, which was 11.7%. During this period the highest discount to
NAV was 19.4% and the lowest discount to NAV was 1.9%.
IF THE MERGER IS NOT APPROVED
If the Merger is not approved by shareholders, PXPVF will
continue in the immediate future as a closed-end fund, listed on
the London Stock Exchange's Main Market for listed securities.
PXPVF's Articles of Association require PXPVF to put before its
annual general meetings in 2015, 2016, 2017 and 2018 a special
resolution to consider the conversion of PXPVF to an open-ended
mutual fund. If Shareholders do not decide by special resolution to
convert PXPVF to an open-ended mutual fund in any such annual
general meeting (or to wind up PXPVF) PXPVF will continue to
operate until 31 December 2019.
TIMELINE FOR THE MERGER
26 November Release circular to PXPVF Shareholders including
2014 EGM notice and voting forms
15 December Record date for entitlement to vote at the EGM
2014 of Shareholders of PXPVF
17 December Hold EGM of Shareholders of PXPVF
2014
17 December Hold EGM of holders of Management Shares of VEEF
2014
18 December Announcement of the results of the EGMs of PXPVF
2014 and VEEF
18 December Submit draft Plan of Merger to the Cayman Islands
2014 Registrar of Companies
31 December NAV valuation day for Merger share exchange
2014
9 January 2015 Announcement of 31 December 2014 NAVs of PXPVF
and VEEF, and share exchange ratio
9 January 2015 Submit Plan of Merger to the Cayman Islands Registrar
of Companies for final approval
29 January 2015 Depository Interests to be withdrawn from the
Depository Interests register and transferred
to Ordinary Shareholders register
30 January 2015 Suspension of the listing of shares of PXPVF
7.30 a.m. UK
time
2 February 2015 Effective date of Merger
2 February 2015 PXPVF share register closes
6.00 p.m. UK
time
3 February 2015 Cancellation of the listing of shares of PXPVF
8.00 a.m. UK
time
9 February 2015 Contract notes issued to former Shareholders of
PXPVF informing them of their new holdings in
VEEF
EXTRAORDINARY GENERAL MEETING
Notice of an Extraordinary General Meeting of PXP Vietnam Fund
Limited to be held at the offices of Harney Westwood & Riegels,
Two Exchange Square, 8 Connaught Place, Central, Hong Kong on 17
December 2014 at 5.00 p.m. Hong Kong time is set out on pages 13 to
14 of the Circular. Shareholders will be asked to consider and, if
thought fit, pass a special resolution to approve the Merger and
the Plan of Merger, and to cancel the listing of the ordinary
shares of PXPVF on the London Stock Exchange.
A copy of the Circular can be obtained in the section relating
to PXPVF Announcements on the website of PXP Vietnam Asset
Management: http://pxpam.com/our-products/
The Circular will be submitted to the National Storage Mechanism
and will shortly be available for viewing online at the following
website address: http://www.hemscott.com/nsm.do
For further information please contact:
PXP Vietnam Asset Management
Kevin Snowball
Tel: +84 (0)8 3827 6040
khsnowball@pxpam.com
ir@pxpam.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
CIRLLFIVLDLRFIS
Pxp Vietnam (LSE:VNF)
Historical Stock Chart
From Apr 2024 to May 2024
Pxp Vietnam (LSE:VNF)
Historical Stock Chart
From May 2023 to May 2024