Absolute Capital soars on demerger plan
Shares in Absolute Capital rallied strongly Wednesday as the hedge fund manager disclosed details of the demerger of its Argo business.
Under the proposal, shareholders will retain their existing holdings in Absolute Capital and will receive an equivalent number of shares in a new entity that will own the Argo businesses.
Application will be made for shares in the new company to be admitted to AIM within six months of the share distribution.
The proposal is subject to the approval of shareholders at an Extraordinary General Meeting. The directors of Absolute Capital intend to vote in favour of the proposal in respect of their shareholdings which represent around one third of the shares in issue.
Chief executive officer of Absolute Capital, Jonathan Treacher, said the demerger was a "sensible and logical" move.
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"The board strongly believes the demerger will overall enhance shareholder value in the Absolute Capital and Argo businesses," Treacher revealed.
"Both businesses will be in a stronger position to execute their growth strategies by attracting and retaining funds under management and expanding their management teams, as independent asset management firms," treacher added.
Absolute Capital Management has had a torrid time of it since September of last year, starting with the resignation of co-founder and co-chief investment officer Florian Homm over "philosophical differences."
The company had to suspend investors' ability to redeem equity fund shares in September after receiving over $100m in redemption notices, a move which sparked a restructuring as the company sought to avoid some of its funds being wound up.
Though the share price rallied strongly on the demerger announcement, they still trade at less than one-tenth of their 52-week high.
