Perpetual changes bathwater at Castle Point
Perpetual Guardian Investments has made a few changes to the Castle Point funds including selling its holdings in Synlait Milk and Move Logistics.
Wednesday, July 17th 2024, 6:32AM
by Jenny Ruth
“I don't want to litigate the exact reasons why we've left,” PG Investments chief investment officer Tim Chesterfield told a webinar for wholesale clients.
“But those investments don't fit our return profile for an investment we believe we should have in this portfolio that investors deserve.”
Perpetual bought the Castle Point funds, which has $300 million in funds under management, earlier this year for an undisclosed sum.
On July 11, Synlait's investors approved a $130 million loan from its 39% shareholder, China-based Bright Dairy, to repay bank debt and prevent it going immediately into receivership.
Chair George Adams told shareholders that the company would need to raise hundreds of millions of dollars to recapitalise Synlait. Inevitably, that is likely to massively dilute existing shareholders unless they decide to buy more shares.
The shares are trading at 32 cents, up from their low at 20c in late June, but they are still down more than 80% from a year ago.
Sylait's last annual report showed that at July 31 last year, Castle Point owned just over 900,000 shares.
Move's chief executive, Craig Evans, resigned last week with the company saying that Evans had taken on the role in February 2023 “at a time when Move was embarking on a growth and expansion phase.”
Chair Julia Raue said that “economic headwinds over the last 18 months have hampered progress on growth initiatives and driven a material change in strategic focus to match market conditions.”
Move reported a $10.7 million net loss for the six months ended Dec 31 and said in late May that at the full year it will be writing down the value of the Atlas Wind vessel, which is up for sale, and goodwill in the warehousing business.
On May 1, Castle Point told NZX it had sold its stake in Move down from 6.2% to 3.9%.
Chesterfield told the webinar said the selldown of these positions will free up capital to invest in new ideas.
We're changing the bath water. We're not throwing the baby out.
He also said that Perpetual will be driving down cash within the Castle Point Ranger fund so that it is fully invested in Australasian shares.
“My belief is we should be able to find good medium and long term investment opportunities,” he said.
While Perpetual is making some changes to the Castle Point portfolio, its structure “will not change dramatically,” Chesterfield said.
“We're changing the bath water. We're not throwing the baby out.”
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